nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒02‒22
eleven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Distribution of Household Income and Federal Taxes, 2011 By Congressional Budget Office
  2. What drives tax refund maximization from inter-temporal loss usage? Evidence from the German taxpayer panel By Werdt, Clive
  3. Deception Choice and Audit Design - The Importance of Being Earnest By Lohse, Tim; Konrad, Kai A.; Qari, Salmai
  4. Transfer Pricing by Multinational Firms: New Evidence from Foreign Firm Ownerships By Cristea, Anca D.; Nguyen, Daniel X.
  5. Tax mimicking in the short- and long-run: Evidence from German reunification By Baskaran, Thushyanthan
  6. Fiscal federalism and tax enforcement By Bönke, Timm; Jochimsen, Beate; Schröder, Carsten
  7. A New Data Set of Quarterly Total Factor Productivity in the Canadian Business Sector By Shutao Cao; Sharon Kozicki
  8. Effective exchange rates, current accounts and global imbalances By Beckmann, Joscha; Czudaj, Robert
  9. Small fiscal multipliers do not justify austerity: a macroeconomic accounting analysis of public debt-to-gdp dynamics By Garbellini, Nadia
  10. Crisis Diagnosis in Anti-Crisis Management Process in a Company By Ruta Meiste; Sandra Jakstiene
  11. Better residential than ethnic discrimination! : Reconciling audit's findings and interviews' findings in the Parisian housing market By François Bonnet; Etienne Lalé; Mirna Safi; Etienne Wasmer

  1. By: Congressional Budget Office
    Abstract: Because higher-income households receive a much greater share of the nation’s before-tax income and pay higher average federal tax rates on that income, they pay much more in federal taxes than lower-income households do. In 2011, households in the top quintile received 52 percent of before-tax income and paid 69 percent of federal taxes; households in the bottom quintile received 5 percent of before tax-income and paid 1 percent of federal taxes.
    JEL: H20 H24 H50 J30
    Date: 2014–11–12
  2. By: Werdt, Clive
    Abstract: This paper investigates the inter-temporal loss usage of tax units in Germany. Tax units that experience a loss in a year can offset that loss with positive income from adjacent year to receive a tax refund. Similar to companies, tax units can employ losses as carry-back in the year before the loss or as carry-forward in the year following the loss. The tax code does not force a particular loss usage but provides tax units with freedom to allocate the losses between carry-back and carry-forward. Choosing an individual appropriate allocation of carry-back and carry-forward creates a maximal tax refund. Intertemporal loss usage is a special case of tax avoidance: tax units receive a tax refund from loss usage as carry-forward (carry-back) but forfeit the alternative refund from carry-back (carry-forward). Estimations show that the probability of maximizing the tax refund highly depends on the difference of the tax rates from the loss adjacent years. An increase of 10 percentage points of the tax rate difference increases the probability of tax refund maximization by 24.5%. This confirms that tax avoidance is strong in case of significant tax incentives.
    Keywords: losses,tax planing,taxpayer panel,administrative data
    JEL: H24 H63 D14
    Date: 2015
  3. By: Lohse, Tim; Konrad, Kai A.; Qari, Salmai
    Abstract: We study deception choices and deception detection in a tax compliance experiment. We find large systematic differences in individual deception abilities. Tax payers are conscious about their own deception abilities. The empirical outcomes are in line with a theory suggesting that tax payers make their choices whether to underreport or report truthfully on the basis of their own deception ability. Tax payers with high deception ability are more likely to underreport. This selection effect is stronger if the fines for underreporting are higher. These results provide an (additional) reason why random audits are superior to audits based on discretionary choice.
    JEL: H31 K42 C91
    Date: 2014
  4. By: Cristea, Anca D.; Nguyen, Daniel X.
    Abstract: Using a firm-level panel dataset covering the universe of Danish exports between 1999 and 2006, we find robust evidence for profit shifting by multinational corporations (MNC) through transfer pricing. Our triple difference estimation method corrects for a downward bias in previous studies. The bias results from MNCs adjusting their arm's length prices to obscure the extent of their transfer price manipulations. Our identification strategy exploits the movement in export prices to a destination in response to: (1) the establishment of a foreign affiliate by an exporter to that destination, and (2) a change in the foreign corporate tax rates. Once owning an affiliate in a country with a corporate tax rate lower than in the home country, Danish multinationals reduce the unit values of their exports there between 5.7 to 9.1 percent, on average. This reduction corresponds to $141 million in underreported export revenues in year 2006, which translates into a loss in tax income equal to 3.24 percent of Danish MNCs' tax returns.
    Keywords: corporate tax, transfer pricing, arm's length principle, triple difference, foreign ownership
    JEL: D23 F23 H25
    Date: 2013–12–07
  5. By: Baskaran, Thushyanthan
    Abstract: This paper uses the quasi-experiment of Germany´s reunification to identify local tax mimicking by municipalities in Eastern-Germany. After reunification, East-German municipalities were allowed to independently set, for the first time in decades, local business and property tax rates. I explore whether the tax rates chosen by East-German border municipalities were influenced by the tax rates of adjacent West-German municipalities. To obtain causal estimates, I rely on instrumental variables regressions within the spatial lag framework, using West-German border municipalities - tax rates in 1989 as instruments for their post-reunification tax rates. The results suggest that East-German municipalities mimicked business tax rates immediately after reunification, but not in later years. I find no evidence of mimicking for property taxes. These results indicate that mimicking is not an important determinant of local tax policy.
    Keywords: tax mimicking,business taxes,property taxes,German reunification
    JEL: H20 H71 H77
    Date: 2015
  6. By: Bönke, Timm; Jochimsen, Beate; Schröder, Carsten
    Abstract: In many federations, fiscal equalization schemes soften fiscal imbalances across the member states. Such schemes usually imply that a member state internalizes only a small fraction of the additional tax revenue from an expansion of the state-specific tax base, while the remainder of the additional tax revenue is redistributed horizontally or vertically. We address the question as to which extent state-level authorities in such a federation under-exploit their tax bases. By means of a stylized model we show that the state authorities in such a federation have incentives to align the effective tax rates of the state residents to the internalized marginal return from a stricter enforcement of the tax law. We empirically test the model using two approaches. In a state-level approach, we explore whether the state-specific internalized marginal returns matter for the states investments in tax enforcement. In a micro-econometric approach, using OLS regressions and natural-experiments, we explore whether internalized marginal returns matter for the effectiveness of the states tax enforcement activities, captured by the tax deductions granted to tax units. All our estimates support the results from our theoretical model.
    JEL: H21 H77 C21
    Date: 2014
  7. By: Shutao Cao; Sharon Kozicki
    Abstract: In this paper, a quarterly growth-accounting data set is built for the Canadian business sector with the top-down approach of Diewert and Yu (2012). Inputs and outputs are measured and used to estimate the quarterly total factor productivity (TFP). In addition, the estimates of annual TFP growth by Diewert and Yu (2012) are revised and updated to reflect changes in the new national economic accounts and national balance-sheet accounts. The quarterly series also provide suitable data for studying short-run dynamics. To demonstrate, a simple vector autoregressive model is estimated to study the responses of hours worked and investment to TFP shocks. Hours worked drop and investment rises in reaction to a positive TFP shock.
    Keywords: Productivity
    JEL: O47 D24 F43
    Date: 2015
  8. By: Beckmann, Joscha; Czudaj, Robert
    Abstract: This study analyzes the dynamics between real e ective exchange rates and current account patterns from a novel perspective. We start by dissecting long-run and time-varying short-run dynamics between both variables. Following this, we extend our framework by including interest rates into our analysis. Finally, we examine common exchange rate and current account dynamics based on common factors derived from a principal components analysis. Our results show that a real appreciation is positively related to a worsening of the current account in most cases. The adjustment pattern is time-varying but suggests that the causality mainly runs from e ective exchange rates to current accounts and occurs through valuation e ects. However, an extension of our framework based on monthly data shows that trade balance adjustment is observed less frequently. From a global point of view, cross-country trends which drive exchange rates and current accounts also share similar dynamics over the long-run.
    JEL: F31 F32 G15
    Date: 2014
  9. By: Garbellini, Nadia
    Abstract: In the aftermath of a crisis which has now been lasting for more than five years, the debate about the size of fiscal multipliers arouse. Whatever the estimation approach, fiscal multipliers assumed for projections are the result of extrapolations from time series data. The present contribution aims at taking a different perspective, by answering the following question: is it really necessary to know the value of fiscal multipliers to take sensible policy decisions?
    Keywords: Fiscal multipliers, Debt-to-gdp ratio, Consolidation programmes, Eurozone Crisis.
    JEL: E62 H62 O43
    Date: 2014–03
  10. By: Ruta Meiste (Utena University of Applied Sciences, Lithuania); Sandra Jakstiene (Utena University of Applied Sciences, Lithuania)
    Abstract: Crisis concept links up to its appearance area. Some different kinds and levels of crises have been found: we face with global, mainly nature cataclysm crises, state economic crises, corporate crises and individual or psychological crises. The research area of this paper is micro level, i.e. corporate crises or crisis in a company. However, it is emphasized that company is a sociotechnical system, performing in a complex environment, therefore crisis in a company is closely related to global and state crises, e.g. economic crises, which often cause the corporate crises, and to individual crises what can appear as crisis reason as well as crisis consequence. The relevance of the crisis situation diagnosis is confirmed by the diagnosis decisions designed and applied in the business practice, audit reports, bank assessment methods and company‘s own concernment. The aim of the research is to define crisis development stages and possible preventive means and to design the crisis diagnosis system in the anti-crisis management process in a company. The paper deals with four stages of crisis development: prodromal crisis (CP), acute crisis (CA), and chronic crisis (CC). Crisis resolution (CR) is the final goal of any crisis management. When crisis is overcome, its performance stabilizes and a company starts to grow. Therefore the main point in company’s management process is to notice barrier when company’s performance starts going down in order to foresee the result which can cause crisis situation in a company.
    Keywords: crisis, diagnosis, anti-crisis management process
    JEL: M10
    Date: 2015–02
  11. By: François Bonnet (ASAP); Etienne Lalé (École Nationale de la Statistique et de l'Administration Économique (ENSAE)); Mirna Safi (Observatoire sociologique du changement); Etienne Wasmer (Département d'économie)
    Abstract: This article investigates discrimination and the interplay of residential and ethnic stigma on the French housing market using two different methods, paired-testing au- dit study of real estate agencies and face-to-face interviews with real estate agents. The juxtaposition of their findings leads to a paradox: interviews reveal high levels of ethnic discrimination but little to none residential discrimination, while the audit study shows that living in deprived suburbs is associated with a lower probability of obtaining an appointment for a housing vacancy but ethnic origin (signaled by the candidate’s name) has no significant discriminatory effect. We have three priors po- tentially consistent with this apparent paradox and re-evaluate their likelihood in light of these findings: (i) agents make use of any statistical information about insolvency, including residency; (ii) there are two distinct and independent taste discriminations, one about space and one about ethnicity; (iii) these two dimensions exist and comple- ment each other.
    Date: 2015–02

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