nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2018‒07‒30
eight papers chosen by

  1. Combatting Tax Evasion: Evidence from Comparing Commercial and Business Tax Registry By Collen Lediga; Nadine Riedel; Kristina Strohmaier
  2. The European Union’s Proposed Digital Services Tax: A De Facto Tariff By Gary Clyde Hufbauer; Zhiyao (Lucy) Lu
  3. Optimal Capital Taxation Revisited By Chari, V. V.; Nicolini, Juan Pablo; Teles, Pedro
  4. Local Taxation and Tax Base Mobility: Evidence from a business tax reform in France By Tidiane Ly; Sonia Paty
  5. Financialisation and innovation in emerging economics By Halima Jibril; Annina Kaltenbrunner; Effi Kesidou
  6. Sorting or Steering: Experimental Evidence on the Economic Effects of Housing Discrimination By Peter Christensen; Christopher Timmins
  7. Chapter 2: Poverty, Tax Competition, and Base Erosion By Durst, Michael C.
  8. Curvas Laffer de la Tributación en Colombia By Ignacio Lozano-Espitia; Fernando Arias-Rodríguez

  1. By: Collen Lediga; Nadine Riedel; Kristina Strohmaier
    Abstract: In 2008 and 2014, the South African Revenue Service (SARS) did snapshot synchronizations of its business tax registry with the country’s commercial register in an attempt to identify firms that are non-compliant with their obligation to register with SARS for business tax purposes. We analyse these interventions drawing on SARS’s business tax registry and the population of business tax returns between 2009 and 2014. Several findings emerge. First, in both years, the comparisons resulted in the identification of around 300,000 non-compliant taxpayers, providing prima facie evidence of significant extensive-margin tax evasion. The interventions significantly raised South African business tax revenues in the following years despite the fact that the identi-fied ‘extensive-margin evaders’ exhibit a lower propensity to submit tax returns and, conditional on return submission, report less income than comparable entities that voluntarily registered with SARS. The analysis further suggests that the observed gap in reported taxable income relates to underlying differences in firm size and corporate profitability rather than intensive-margin tax evasion. In line with ‘missing middle theories’, extensive-margin evaders that submit tax returns are, moreover, found to exhibit increased sales and asset growth after their forced registration with SARS.
    Keywords: tax evasion, less developed countries, tax administration
    JEL: H20 H70
    Date: 2018
  2. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao (Lucy) Lu (Peterson Institute for International Economics)
    Abstract: Over the past three years, the European Union has sought various ways to curb tax avoidance practices and collect more revenue from an array of US multinational corporations (MNCs), triggering disputes with some of the giants in the field. Now the European Commission is looking to tax MNCs’ digital earnings. It has proposed a digital services tax (DST), which would tax the part of a digital firm’s revenues attributed to European member states, and a digital profits tax, which would tax the slice of corporate profits derived in member states. These new tax proposals arise in a general European atmosphere of distrust towards highly successful US firms, exemplified by attacks on US digital firms over privacy issues and concerns that tech giants may be defying EU competition policy standards. Many US MNCs in the digital industry, such as Google and Facebook, may be subject to the proposed taxes. Hufbauer and Lu argue that the DST has the characteristics of a prohibited tariff under the rules of the World Trade Organization. They suggest several countermeasures the United States could pursue if the European Union moves forward with implementing the DST.
    Date: 2018–06
  3. By: Chari, V. V. (Federal Reserve Bank of Minneapolis); Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis); Teles, Pedro (Banco de Portugal)
    Abstract: We revisit the question of how capital should be taxed, arguing that if governments are allowed to use the kinds of tax instruments widely used in practice, for preferences that are standard in the macroeconomic literature, the optimal approach is to never distort capital accumulation. We show that the results in the literature that lead to the presumption that capital ought to be taxed for some time arise because of the initial confiscation of wealth and because the tax system is restricted.
    Keywords: Capital income tax; Long run; Uniform taxation
    JEL: E60 E61 E62
    Date: 2018–07–06
  4. By: Tidiane Ly (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Sonia Paty (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper investigates the impact of tax base mobility on local taxation. We first develop a theoretical model in order to examine the connection between local business property taxation and tax base mobility within a metropolitan area. We find that decreasing capital intensity in the tax base increases the business property tax rates unambiguously. We then test this result using a French reform, which changes the composition of the main local business tax base in 2010. Estimations using Difference-inDifferences show that the reduction in the mobility of the tax base indeed results in higher business property tax rates. Housing tax rates were not affected by the reform.
    Keywords: Local taxation,Tax base mobility,Tax competition,Difference-in-Differences
    Date: 2018
  5. By: Halima Jibril; Annina Kaltenbrunner; Effi Kesidou
    Abstract: This article contributes to the literature on the financial constraints of innovation in two ways. First, we examine whether financialisation has transformed the relation between finance and innovation by assessing the association between companies' financial relations, both on the liability side and the asset side of their balance sheets, and intangible assets. Second, this is the first study that examines theoretically and empirically the link between financialisation and innovation in the context of emerging markets using the population of publicly listed companies in Brazil over the period 2011-2016. We find evidence that whilst financial liabilities do not affect investments on intangibles, higher financial assets and financial profits discourage investments on intangibles. Other indicators of financialisation are not significant. Thus, our results support the crowding-out hypothesis that financialisation i.e. companies' increased tendency to hold financial assets and generate revenue from financial income rather than their underlying operations, discourages investments on innovation.
    Keywords: Financialisation, Intangible assets, Innovation-driven growth, Emerging economies
    Date: 2018
  6. By: Peter Christensen; Christopher Timmins
    Abstract: Housing discrimination is illegal. However, paired-tester audit experiments have revealed evidence of discrimination in the interactions between potential buyers and realtors, raising concern about whether certain groups are systematically excluded from the beneficial effects of healthy neighborhoods. Using data from HUD's most recent Housing Discrimination Study and micro-level data on key attributes of neighborhoods in 28 US cities, we find strong evidence of discrimination in the characteristics of neighborhoods towards which individuals are steered. Conditional upon the characteristics of the house suggested by the audit tester, minorities are significantly more likely to be steered towards neighborhoods with less economic opportunity and greater exposures to crime and local pollutants. We find that holding locational preferences or income constant, discriminatory steering alone may contribute substantially to the disproportionate number of minority house- holds found in high poverty neighborhoods in the United States. The steering effect is also large enough to fully explain the differential in proximity to Superfund sites among African American mothers. These results have important implications for studies of “neighborhood effects” and confirm an important mechanism underlying observed correlations between race and pollution in the environmental justice literature. Our results also suggest that the basic utility maximization assumptions underlying hedonic and residential sorting models may often be violated, resulting in an important distortion in the provision of local public goods.
    JEL: Q51 Q53 R31
    Date: 2018–07
  7. By: Durst, Michael C.
    Abstract: This is Chapter 2 of the book “Taxing Multinational Business in Lower-Income Countries: A Problem of Economics, Politics and Ethical Norms†. In this installment, the author examines the basic economic dilemma faced by lower-income countries with respect to the corporate tax and offers an historical overview of BEPS-style corporate tax planning.
    Keywords: Governance,
    Date: 2018
  8. By: Ignacio Lozano-Espitia (Banco de la República de Colombia); Fernando Arias-Rodríguez (Banco de la República de Colombia)
    Abstract: En este documento se estiman las curvas de Laffer para los impuestos al trabajo, al capital y al consumo en Colombia. Se utiliza un modelo neoclásico de crecimiento con capital humano del tipo insinuado por Trabandt y Uhlig (2011), el cual es calibrado con la información de las cuentas nacionales para el período 1994 a 2015. Los resultados permiten, por una parte, comparar las tarifas impositivas efectivas actuales sobre los factores de producción frente aquellas que maximizaría los recaudos del gobierno y, por consiguiente, derivar el espacio fiscal que eventualmente tiene el gobierno por el lado de los impuestos. Por otra, permiten simular ejercicios de la política fiscal mediante el uso de sus principales instrumentos y, finalmente, contrastar las tarifas tributarias efectivas y las curvas de Laffer en Colombia frente a la de los países de la OECD. **** This paper estimates the Laffer curves in Colombia for taxes on labor income, capital gains, and consumption. We used a neoclassical growth model with human capital, as that suggested by Trabandt and Uhlig (2011), inputting data from the national accounts system, for the period 1994 to 2015. The results permit to compare the current effective tax rates on the factors of production against that which would maximize the government's revenues, and therefore derive the government's possible taxrelated fiscal space. Furthermore, they help us perform some fiscal-policy simulations employing the policy's main tools, and they let us contrast Colombia's effective tax rates and Laffer curves with those of the OECD countries. Classification JEL: E13, E62, H20, H30, H60
    Keywords: Curva de Laffer, Política Fiscal, Impuestos al Trabajo, Impuestos al Capital, Impuestos al Consumo, Laffer curves, Fiscal Policy, Taxes on Consumption, Taxes on labor and capital incomes
    Date: 2018–07

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