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on Accounting and Auditing |
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Issue of 2019‒10‒28
seven papers chosen by |
| By: | James Alm (Tulane University); James C. Cox (Georgia State University); Vjollca Sadiraj (Georgia State University) |
| Abstract: | We develop and analyze a dynamic model of individual taxpayer compliance choice that predicts "audit state dependent taxpayer compliance," by distinguishing between the implications of forward-looking versus myopic versus naïve behavior. We then test experimentally the audit state dependent model by reporting the results from the first tax compliance experiment run in Colombia. Consistent with previous studies as well as theoretical predictions, we find that subjects' compliance rates increase with greater enforcement, especially the audit rate. We also find more novel results, both theoretically and empirically: fine rates should be increased after an audit to discourage otherwise-increased underreporting, and "nudging" myopic individuals toward reporting a constant rather than a fluctuating proportion of income would benefit both the taxpayer and the tax authority. |
| Keywords: | Tax compliance, nudges, laboratory experiments. |
| JEL: | H26 C91 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1907&r=all |
| By: | Vincent Vicard |
| Abstract: | The well documented US excess returns on its net foreign assets is no exception at the world level. Excess returns on foreign assets owe largely to yield differential within the FDI asset class and are correlated to the corporate tax rate for a large sample of countries, consistently with tax motivated profit shifting by multinational corporations. Using French firm level data on dividends and reinvested earnings from foreign affiliates, I provide evidence and quantify the impact of corporate tax avoidance on international asset returns. Profit shifting inflates the investment income balance and accounts for the average 2 percentage points return differential between French FDI assets and liabilities. Missing profts in France, estimated at €36 billions or 1.6% of GDP in 2015, are mostly shifted to EU countries. |
| Keywords: | Proft Shifting;Multinational Firms;FDI;Investment Income;Tax Avoidance |
| JEL: | H26 H25 H32 F14 F23 |
| Date: | 2019–03 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2019-06&r=all |
| By: | Sebastian Beer; Matthias Kasper; Erich Kirchler; Brian Erard |
| Abstract: | This paper employs unique tax administrative data and operational audit information from a sample of approximately 7,500 self-employed U.S. taxpayers to investigate the effects of operational tax audits on future reporting behavior. Our estimates indicate that audits can have substantial deterrent or counter-deterrent effects. Among those taxpayers who receive an additional tax assessment, reported taxable income is estimated to be 64% higher in the first year after the audit than it would have been in the absence of the audit. In contrast, among those taxpayers who do not receive an additional tax assessment, reported taxable income is estimated to be approximately 15% lower the year after the audit than it would have been had the audit not taken place. Our results suggest that improved targeting of audits towards noncompliant taxpayers would not only yield more direct audit revenue, it would also pay dividends in terms of future tax collections. |
| Date: | 2019–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/223&r=all |
| By: | James Alm (Tulane University) |
| Abstract: | The Indonesian tax system is plagued by a number of problems. Of most importance, the tax system generates an extraordinarily low level of revenues, due to several aspects of the tax system. There is evidence of significant amounts of tax evasion. The tax base has also been reduced by deliberate tax structure decisions, especially the choice of thresholds in the corporate income tax and in the value-added tax, along with the extensive system of fiscal incentives that are available in both taxes. These features of the tax system contribute to an overly complicated system, and they also illustrate the limitations of the tax administration. Indeed, the system has evolved over time in a piecemeal, ad hoc manner with little apparent thought given to the ways in which the pieces of the system need to fit together. This paper analyzes these problems, and it suggests possible options for tax reform. |
| Keywords: | Indonesia, tax reform. |
| JEL: | H20 H24 H25 H87 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1906&r=all |
| By: | Yoshio Kamijo; Takehito Masuda; Hiroshi Uemura |
| Abstract: | We employed a game-theoretic framework to formulate and analyze a number of tax audit rules, especially the lowest income reporter audited rule. We explicitly considered the auditor’s resource constraint to choose one target from a continuous type of taxpayer. We then tested the theoretical predictions in a laboratory experiment, using three audit rules: the random, cut-off, and lowest income reporter audited rules. While the cut-off rule is known to be optimal in theory, it has not thus far been examined in a controlled laboratory experimental setting. Contrary to the theory, the lowest income reporter audited rule increased average compliance behavior significantly more compared with the optimal cut-off rule and, especially, the random rule. This holds with and without controlling the subjects’ demographics and attitudes regarding tax payment. This finding is practically important because the tax authorities in most countries assign higher priority to enhancing tax compliance. |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1064&r=all |
| By: | Vet, Cassandra; Cassimon, Danny; Van de Vijver, Anne |
| Abstract: | It is widely recognized that international corporate taxation holds a distributional bias towards advanced economies and that developing countries only play a marginal role in tax governance-making. Yet, it is the ambition of both the G20 and the OECD to integrate developing countries in the BEPS Inclusive Framework. The Base Erosion and Profit Shifting (BEPS) Action Plan is the latest global initiative to update the international framework of corporate taxation and curb corporate tax avoidance. Nonetheless, the overall mode of integration continues to be on implementation and technical assistance in transfer pricing auditing should enable developing countries to implement the OECD transfer pricing regime despite its cost- and capacity-intensive nature. In contrast to apolitical approaches, the purpose of this paper is to critically asses how uneven power resources shape the distributional outcomes of the G20-OECD transfer pricing regime. Therefore, this study adds an additional criterion to the output legitimacy of the G20-OECD BEPS Project, namely, distributive justice. Specifically, this case-study of the reform of the guidance on the Transactional Profit Split Method (TPSM) reveals that the regime excludes low-income countries in Sub-Saharan Africa from participating in the fiscal impact of residual profits. Whereas the revised TPSM guidance expands the size of the overall cake of taxable profits, the criteria to use the TPSM and the ongoing complexity of the regime make it difficult for low-income countries in Sub-Saharan Africa to obtain a decent slice of the cake and actually eat it. |
| Keywords: | Sub-Saharan Africa; taxation |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:iob:wpaper:201904&r=all |
| By: | Lapsley, Irvine; Miller, Peter |
| Abstract: | The purpose of this paper is to provide an evaluation of public sector research in the 1998–2018 period. Design/methodology/approach The paper uses the extant literature of this era to study the theorisation of, and the findings of, public sector research. Findings This is a vibrant field of a study in a wide range of study settings and with many interdisciplinary studies. The influence of new public management is pervasive over this period. There are numerous instances of innovations in study settings, in key findings and the approach taken by investigators. Research limitations/implications This is not a comprehensive review of all literature in this period. Practical implications This study also explored the relevance of academic research of this era to policymaking by governments. Originality/value This paper offers a distinctive critique of theorisation of public sector accounting research. It reveals the dominant theoretical reference points in use during this period and observes the increasing tendency for theoretical pluralism to investigate complex study settings. |
| Keywords: | theorization; neoliberal; new public sector; public sector research |
| JEL: | E6 |
| Date: | 2019–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:101931&r=all |