nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2017‒08‒20
four papers chosen by

  1. Post-crisis economic policy coordination in the EU: The European Semester as trigger for the Europeanization of national policies? An analysis of the European Semester's impact on French environmental taxation and VAT policy between 2011 and 2015 By Schreiber, Tim
  2. Does social capital matter in corporate decisions? Evidence from corporate tax avoidance By Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang, Hao
  3. [WTO Case Review Series No.22] Argentina&mdash:Measures Relating to Trade in Goods and Services (DS453): Discrimination against countries not cooperating for tax transparency purposes and legal disciplines of the GATS (Japanese) By KAWASHIMA Fujio
  4. Simulating Business Cash Flow Taxation: An Illustration Based on the “Better Way” Corporate Tax Reform By Seth G Benzell; Laurence J Kotlikoff; Guillermo LaGarda

  1. By: Schreiber, Tim
    Abstract: The economic and financial crisis 2007/08 revealed profound weaknesses of the economic and financial governance framework of the European Union (EU), amongst them the insufficient coordination of EU policies in the field of economic policy. In 2011, EU member states created the European Semester which aimed at better coordinating member states' economic and fiscal policies. Focussing on French value-added tax (VAT) and environmental taxation policy between June 2011 and February 2015, I analyse under which conditions the European Semester process leads to changes in national taxation policies. I develop a theoretical framework that draws on rationalist Europeanization theory to argue that usage of European Semester impulses by domestic pro-reform actors is the central mediating variable to explain whether European Semester impulses lead to changes in national policies. The analysis reveals that despite similar European Semester impulses the degree of subsequent changes in French taxation policies varied significantly. Whereas environmental taxation policy was transformed substantially, VAT policy was only slightly modified. The different strength of domestic usage by French pro-reform actors provides an explanation for this variance: While in environmental taxation policy, a group of pro-reform actors actively used the European Semester impulses to push for substantial reforms, pro-reform actors did not make use of the European Semester impulses in the field of VAT policy.
    Date: 2017
  2. By: Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang, Hao
    Abstract: We investigate whether the levels of social capital in US counties, as captured by strength of civic norms and density of social networks in the counties, are systematically related to tax avoidance activities of corporations with headquarters located in the counties. We find strong negative associations between social capital and corporate tax avoidance, as captured by effective tax rates and book-tax differences. These results are incremental to the effects of local religiosity and firm culture toward socially-irresponsible activities. They are robust to using organ donation as an alternative social capital proxy and fixed effect regressions. They extend to aggressive tax avoidance practices. Additionally, we provide corroborating evidence using firms with headquarter relocation that changes the exposure to social capital. We conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance.
    JEL: A13 H26 M40 M41 Z13
    Date: 2017–08–10
  3. By: KAWASHIMA Fujio
    Abstract: How to address countries not cooperating for tax transparency purposes such as tax havens has long been one of the international challenges, as they have significant damages to each country's tax collection system. In this dispute, Argentina argued that its discriminatory tax or other measures against countries not cooperating for tax transparency purposes were based on such international responses. This paper analyzes how such argument influenced the interpretation by the Panel and the Appellate Body of Article II:1 (most-favoured nation), Article XVII (national treatment), Article XIV (c) (general exception), etc. of the General Agreement on Trade in Services (GATS). In addition, after the world financial crisis in 2008, countries recognized again the necessity for governmental regulations on financial sectors and now tend to adopt prudential measures in broader and more stringent manners than ever, which are more likely to constitute trade restrictions. Against this backdrop, this dispute, in which the prudential exception of paragraph 2(a) of the GATS Annex on the Financial Services was resorted to for the first time since the establishment of the WTO, attracted considerable attention. This paper also examines what interpretation the Panel and the Appellate Body developed on the prudential exception and what practical implications can be learned for governmental regulations on financial services.
    Date: 2017–08
  4. By: Seth G Benzell; Laurence J Kotlikoff; Guillermo LaGarda
    Abstract: The U.S., according to some measures, has one of the highest marginal effective corporate tax rates (METRs) of any developed country. Yet the tax collects less than 2 percent of GDP. This paper studies the impact of replacing the U.S. corporate tax with a Business Cash Flow Tax (BCFT). Our paper studies BCFT reform with reference to a particular, but reasonably generic, proposal, namely the House Republican “Better Way” tax plan. We use the Global Gaidar Model – a 17-region, global, overlapping-generations model, calibrated to U.N. demographic and IMF fiscal data – to simulate the dynamic, general equilibrium impact of this reform. In the short run, the U.S. capital stock, pre-tax wage rates, and GDP rise by roughly 25 percent, 8 percent, and 9 percent, respectively. Over time, the capital stock and wage rates remain significantly above their baseline values. There is a smaller long-run increase in GDP as workers spend some of their higher wages on additional leisure. The tax reform produces enough additional revenues to permit a reduction in personal income tax rates while maintaining the economy's initial debt-to-GDP ratio. The beneficiaries of the House plan are today's and tomorrow's workers. We also simulate a matching METR cut by the rest of the world, which raises the world interest rate. The short-run increases in the capital stock, pre-tax wage rates, and GDP are smaller. However, along the transition path, all U.S. agents experience slightly higher welfare than under the House plan. This reflects the combination of a higher post-corporate tax world interest rate and Americans' disproportionately large holdings of global assets
    JEL: E02 F43 H2 H6
    Date: 2017–08

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