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on Accounting and Auditing |
| By: | Manasan, Rosario G. |
| Abstract: | Proposals to reform the personal income tax has gained prominence in recent months. To date, personal income tax reform is part and parcel of the platform of a number of the candidates in the 2016 presidential elections. This paper aims to evaluate the various proposals in both houses of Congress to amend the existing personal income legislation. Proposals to amend the personal income tax schedule appear to be well-justified from the perspective of (i) the need to eliminate the bracket creep and (ii) easing the tax burden on Filipino personal income taxpayers relative to their ASEAN neighbors. In terms of the progressivity of the personal income tax, all of the proposals to amend the personal income tax are progressive. However, two of the proposals, SB 2149 and HB 4829, are less progressive than the existing rate structure. In terms of revenue yield, all of the proposals are estimated to have a negative impact on government revenue. The projected revenue loss from proposals to restructure the personal income tax is best seen in the context of the government`s overall revenue and tax effort. Fiscal prudence dictates that new revenue measures be found to compensate for the projected revenue loss that will arise as a result of the implementation of any one of the various proposals to restructure the personal income tax. Thus, the questions that beg to be asked is: What new revenue measure or combination of measures will allow government to recover the revenue loss from the new personal income tax structure? Possibilities include increasing the VAT rate, excise tax on petroleum products, and road user`s tax. |
| Keywords: | Philippines, personal income tax, tax reform, value added tax (VAT), excise tax |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:phd:rpseri:dp_2015-48&r=acc |
| By: | Congressional Budget Office |
| Abstract: | An effective marginal tax rate (ETR) measures an investor’s tax burden on returns from an investment. CBO estimates that the ETR, on average, for all capital income is 18 percent. ETRs on returns from investment vary by sector, ranging from 29 percent for businesses to virtually zero for owner-occupied housing. In this report, CBO estimates ETRs under current law and eight policy options for taxing capital income. |
| JEL: | H25 |
| Date: | 2014–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:498171&r=acc |
| By: | Congressional Budget Office |
| Abstract: | CBO examines fair-value accounting as an alternative to the current approach for measuring the costs to the government of selected federal credit programs—specifically, those involving student loans, certain mortgage guarantees, and the Export-Import Bank's loan and loan guarantee programs. The estimated costs of those programs are higher under a fair-value approach because it more fully accounts for the cost of the risk the government takes on. |
| JEL: | G00 |
| Date: | 2014–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:453830&r=acc |
| By: | Oriol Carbonell-Nicolau; Humberto Llavador |
| Abstract: | The case for progressive income taxation is often based on the classic result of Jakobsson (1976) and Fellman (1976), according to which progressive and only progressive income taxes—in the sense of increasing average tax rates on income—ensure a reduction in income inequality. This result has been criticized on the ground that it ignores the possible disincentive effect of taxation on work effort, and the resolution of this critique has been a long-standing problem in public finance. This paper provides a normative rationale for progressivity that takes into account the effect of an income tax on labor supply. It shows that a tax schedule is inequality reducing only if it is progressive—in the sense of increasing marginal tax rates on income, and identifies a necessary and sufficient condition on primitives under which progressive and only progressive taxes are inequality reducing. |
| Keywords: | Progressive Taxation, Income inequality, incentive effects of taxation |
| JEL: | D63 D71 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:849&r=acc |
| By: | Sergio Cesaratto (University of Siena) |
| Abstract: | The primary purpose of these lectures is didactic. They show the development of the ECB intervention from 2008 to 2015 taking the evolution of the consolidated balance sheet of the Eurosystem as reference point. They endorse the theory of endogenous money as theoretical landmark. |
| Keywords: | Eurosystem, Euro, European Central Bank, Balance Sheet, Endogenous Money, Quantitative Easing, Monetary Policy, TARGET 2, Long Term Refinancing Operation, Outright Monetary Transactions. |
| JEL: | E40 E50 F33 F36 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ais:wpaper:1510&r=acc |
| By: | Uddin, Md Akther |
| Abstract: | Islamic finance, a complete rule based financial system, fundamentals of which are originated from revealed verses of the Holy Quran considered direct ordinance from the God and the practices of Prophet Muhammad (PBUH) commonly known as ahadith. Although the concept of Islamic finance is as old as the religion itself but in the Middle Ages Muslims diverted from the original teachings of Islam, only recently Islamic finance has started to reemerge. Therefore, it is necessary to understand the fundamental rules that make Islamic finance different from its counterpart. In this paper an attempt has been made to discuss briefly fundamental principles of Islamic finance namely prohibition of Riba (interest), Gharar(uncertainty) and Maysir (gambling). It is found in the study that these principles are based on the fundamental sources and early Islamic jurists, scholars and contemporary researchers uphold them in carrying out financial transactions. In order to run financial system according to the Islamic principles these concepts must be understood clearly and all transactions must be free from them. |
| Keywords: | Islamic finance, Riba, Gharar, Maysir |
| JEL: | A1 A2 B0 P0 |
| Date: | 2015–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67711&r=acc |
| By: | Yikai Wang (University of Oslo); Hans Holter (University of Oslo); Marcus Hagedorn (University of Oslo) |
| Abstract: | In this paper we consider an optimal taxation problem in an incomplete markets model to study the optimal quantity of capital and debt. The government commits itself ex-ante to a tax schedule and government debt. In contrast to most of the existing literature these instruments are chosen to to maximize agents' discounted present value of lifetime utility. Whereas the literature mainly focuses on characterizing the steady state which maximizes welfare, we characterize and compute the optimal policy along the full transition path. In particular our characterization takes into account that the optimal long-run policy depends on capital, debt and taxation during the transition path. We show theoretically that it is optimal to equalize the pre-tax return on capital and the rate of time preference in the long-run, i.e. the capital stock satisfies the modified golden-rule. Quantitatively we find that the tax on capital is around 3 percent in the long-run. Labor is taxed at a much higher rate where the precise number depends on the labor supply elasticity. For standard choices for this elasticity we find a labor tax rate of almost 40 percent to be optimal in the long-run. The reason for such a hight tax rate on labor income is that labor income is risky. Taxing this risky income and redistributing it back through lump-sum transfers improves ex-ante welfare in the long-run. Transfers and the optimal level of debt along the transition are chosen to equalize the amount of redistribution over time. Initially capital is taxed higher than in the long-run since it is inelastically supplied whereas labor is taxed less than in steady state. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed015:1220&r=acc |
| By: | Stefan Kawalec (Capital Strategy) |
| Abstract: | In 2014, the Eurozone, with its huge current account surplus, was a major source of global economic imbalances. This phenomenon could last for a long time. Monetary expansion, which leads to currency depreciation, is the only macroeconomic tool available to the European Central Bank (ECB) to boost the competitiveness of struggling southern economies vis-à-vis countries outside the Eurozone. With the current economic imbalances within the Eurozone, the elimination the Eurozone’s current account surplus through appreciation of the euro would aggravate economic conditions in struggling member countries and could be politically explosive. Some observers hope that the Eurozone’s internal imbalances can be reduced by more expansionary policies in Germany or, in the future, by wealth transfers to be enabled when the fiscal and political union materializes. Both hopes are unjustified. A huge Eurozone current account surplus is likely to persist, and this will lead to tensions with the US and other trade partners. It could especially undermine the proposed Transatlantic Trade and Investment Partnership (TTIP). This contradicts a popular view that the European Union needs a single currency to operate successfully in the world economy among big players like the US, China and India. In fact, if the Eurozone countries had (or returned to) their national currencies, linked through adjustable currency bands as proposed in Kawalec and Pytlarczyk (2013 a, 2013 b), trade and current account deficits in countries in crisis could be eliminated through balancing imbalances among present Eurozone members, without the necessity to generate a huge surplus by the Eurozone as a whole. However, a single currency forces the Eurozone to try to desperately generate trade and current account surpluses, which is likely to spark currency wars with its main economic partners. This would impede international trade and diminish the benefits that Europe could achieve from international cooperation. |
| Keywords: | Eurozone, Current Account, Euro, Economic Imbalance, National Currencies, Internal Devaluation. |
| JEL: | E66 F32 F33 F36 F35 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:ais:wpaper:1509&r=acc |
| By: | Siddiqi, Hammad |
| Abstract: | An anchoring adjusted Capital Asset Pricing Model (ACAPM) is developed in which the payoff volatilities of well-established stocks are used as starting points that are adjusted to form volatility judgments about other stocks. Anchoring heuristic implies that such adjustments are typically insufficient. ACAPM converges to CAPM with correct adjustment, so CAPM is a special case of ACAPM. The model provides a unified explanation for the size, value, and momentum effects in the stock market. A key prediction of the model is that the equity premium is larger than what can be justified by market volatility. Hence, anchoring could potentially provide an explanation for the well-known equity premium puzzle. Anchoring approach predicts that stock splits are associated with positive abnormal returns and an increase in return volatility. The approach predicts that reverse stock-splits are associated with negative abnormal returns, and a fall in return volatility. Existing empirical evidence strongly supports these predictions. |
| Keywords: | Size Premium, Value Premium, Behavioral Finance, Stock splits, Equity premium puzzle, Anchoring Heuristic, CAPM, Asset Pricing, Financial Economics, G12, G11, G02, |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uqsers:211224&r=acc |
| By: | EZZAHID, Elhadj; MAOUHOUB, Brahim |
| Abstract: | Moroccan economic policy was oriented since mid-1980s to open and liberalize the economy. The openness policy was reinforced with trade flows liberalization in 1993 with accession to article VIII of IMF status. In a new step, the opening of the economy is reached after accession to the GATT and WTO and the conclusion of many bilateral free trade agreements in the end of 1990s and the beginning of the new millennium. Recently, the openness is accelerated in the area of capital flows liberalization with the objective to eliminate the restrictions on capital inflows and then on capital outflows. Thus, the recent capital account dynamics lead us to attempt to evaluate their effects on main macroeconomic variables. For this, we start the discussion by recalling the theoretical debate around external financial liberalization and lessons obtained from the recent experience. After this, we discuss the opportunity for Morocco, as small and open economy, to integrate international financial markets. Methodologically, we use a Structural Vector Auto-Regressive (SVAR) model to explore the interaction between capital flows and macroeconomic variables. The period of study is from 1980 to 2012. The results allow us to conclude that capital account liberalization has a major effect on real effective exchange rate. Capital inflows lead to a temporary depreciation of the real effective exchange rate during the first year and, then, to an appreciation starting from the second year. Precisely, the results confirmed that the conduct of capital account liberalization policy under a fixed exchange rate regime is conducive to the risk of real appreciation. |
| Keywords: | Capital account liberalization, Capital flows, macroeconomic performance, SVAR, Morocco. |
| JEL: | F31 F36 G15 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67627&r=acc |