nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒12‒02
eight papers chosen by

  1. Forward-looking effective tax rates in the banking sector By Ernesto Zangari; Elena Pisano
  2. Taxation and the superrich By Florian Scheuer; Joel Slemrod
  3. A Distorting Mirror: Major Media Coverage of Americans` Tax Policy Preferences By Daniel Chomsky
  4. Monetary Circuit, Capitalist Reproduction and Financial Accounting By Hernando Matallana
  5. The international transmission of US tax shocks: a proxy-SVAR approach By Luca Metelli; Filippo Natoli
  6. Non-Financial Reporting In The Extractive Industry - Regulations And Application By Atanasov, Atanas; Marinova, Rumyana
  7. Accounting matters By Van Der Stede, Wim
  8. The BRICs and International Tax Governance: The Case of Automatic Exchange of Information By Lips, Wouter

  1. By: Ernesto Zangari (Bank of Italy); Elena Pisano (Bank of Italy)
    Abstract: The paper extends to the banking sector the Boadway-Bruce-Mintz framework used to compute marginal and average effective tax rates for non-financial firms. The model focuses on loans and considers the interactions between taxation, accounting, company law and regulation for the Italian banking sector, following the Nordic view of corporate taxation. It allows to disentangle the tax components of loan price, namely tax rates, deductibility of the cost of equity under partial and full ACE systems, taxes on net worth, and limits to the deductibility of interests and loan loss provisions (LLPs), also highlighting the role played by deferred tax assets. The effective tax rates on loans indicate, among other things, that the ACE introduced in 2011 has been effective in reducing the debt bias, and that until 2015 the deductibility limits on LLPs could have generated several distortions, discriminating between borrowers, economic sectors and geographical areas, inducing a pro-cyclical increase in the cost of credit during downturns, and providing disincentives to the timely setting aside of sufficient provisions for non-performing loans.
    Keywords: taxation, banks, effective tax rates, EMTR, EATR, allowance for corporate equity, Basel III, loan loss provisions, deferred tax assets.
    JEL: H25 G21
    Date: 2019–10
  2. By: Florian Scheuer; Joel Slemrod
    Abstract: This paper addresses the modern optimal tax progressivity literature, which clarifies the key role of the behavioral response to taxation and accounts for the incomes of the superrich being qualitatively different than others. Some may be “superstars,” for whom small differences in talent are magnified into much larger earnings differences, while others may work in winner-take-all markets, such that their effort to climb the ladder of success reduces the returns to others. We stress that pivotal tax-rate elasticities are not structural parameters, and will be smaller the broader and less plastic is the tax base and the more effective is the enforcement of tax evasion. For this reason, normative analysis of tax rates should be accompanied by attention to the tax base, with a special focus on capital gains, which comprise a large fraction of the taxable income of the superrich.
    Keywords: Superrich, tax systems, superstars, winner-take-all markets, plasticity of taxable income, wealth taxes
    JEL: H2 H21 H26
    Date: 2019–11
  3. By: Daniel Chomsky (University of Texas Rio Grande Valley)
    Abstract: Over the last four decades, Americans have consistently told pollsters that they favor higher taxes on business and the wealthy, even as tax policy has moved sharply in the other direction. Political scientists and political commentators regularly assume that elected officials respond to the preferences of citizens, despite recent findings that the correlations between public preferences and policy outcomes disappear when accounting for the preferences of the wealthy. This paper quantitatively assesses the failure of democratic responsiveness on this issue. It examines coverage of American’s tax policy preferences in two major national newspapers, the New York Times and USA Today. Both newspapers exhibit nearly identical behavior: they privilege elite sources, ignore the voices of ordinary citizens, and misrepresent public preferences. They also highlight expressions of public opposition to taxes and suppress evidence of persistent public support for higher taxes on business and the wealthy.
    Keywords: Tax Policy, Democratic Theory, Mass Media, Public Opinion, New York Times, USA Today
    JEL: D72 H20 H30 L82 M38 P16 Z1
    Date: 2018–04
  4. By: Hernando Matallana
    Abstract: A key issue in heterodox economics is the theoretical determination of the inner logic of the economic process through which the functional conditions of social reproduction are systematically recreated in capitalism. The monetary circuit is a particular moment of the economic process through which the recreation of private property as the capitalist social relation takes place. The understanding of the monetary logic of what Marx called the “process of circulation of capital” is thus a central element of a monetary heterodox theory of capitalism. Financial accounting methods currently applied as a powerful tool of control of society can be used critically to illuminate the capitalist circulation process. *** Una cuestión clave en la economía heterodoxa es la determinación teórica de la lógica interna del proceso económico a través del cual son recreadas sistemáticamente las condiciones funcionales de la reproducción social en el capitalismo. El circuito monetario es un momento particular del proceso económico a través del cual tiene lugar la recreación de la propiedad privada como la relación social capitalista. La comprensión de la lógica monetaria de lo que Marx llamó el “proceso de circulación del capital” es por tanto un elemento central de la teoría heterodoxa monetaria del capitalismo. Los métodos de la contabilidad financiera utilizados comúnmente como una herramienta poderosa de control social son utilizados aquí para iluminar el proceso de circulación capitalista.
    Keywords: Capitalism, economic circuit, financial accounting, monetary production economy, social reproduction
    JEL: E11 E12 E25 M41
    Date: 2019–11–22
  5. By: Luca Metelli (Bank of Italy); Filippo Natoli (Bank of Italy)
    Abstract: We investigate the international propagation of tax rate shocks originating in the United States using a global vector error-correction model (GVAR). We identify shocks to corporate and personal income tax rates by using narrative series as external instruments, following the proxy-SVAR methodology. The main results of the paper are the following: (1) the domestic effects of corporate tax shocks are stronger than those of personal income tax shock; (2) spillovers are in most cases positive and significant, albeit of small size; (3) the boost to exports in recipient economies, stimulated both by stronger US demand and by real exchange rate depreciation vis-à-vis the US dollar, is the main transmission channel; financial channels (through long-term interest rates) also play a role.
    Keywords: international fiscal spillovers, proxy SVAR, GVAR
    JEL: C22 E62 F42
    Date: 2019–06
  6. By: Atanasov, Atanas; Marinova, Rumyana
    Abstract: The extractive industry constitutes about 5% of Bulgaria's GDP, and the gross value added per person employed for 2016 is 47.19 thousand BGN, which assigns it a significant position in the business statistics of this country. At the same time the environmental and social matters occupy a central place in assessing the activities of enterprises in this industry. The aim of this publication is to substantiate the need to introduce uniform practices in disclosing non-financial information on the part of enterprises in the extractive industry and the ways in which the management of these enterprises communicates that information to stakeholders. The article reviews the financial statements of the ten largest companies in the industry according to the amount of realised revenue for 2017. It was found that despite the importance of the issues of environmental and social nature, the enterprises in this industry are not obliged to prepare a non-financial declaration (statement) within the meaning of the Accountancy Act, and the information disclosed by them in management reports is primarily descriptive in nature. As a result of this a proposition is put forward that, with regard to the enterprises in this industry, a requirement for the preparation of a non-financial declaration should be introduced, whereby the main part of the disclosed non-financial information is to be "structured" and appropriately linked to the financial indicators of the enterprise as part of a single integrated management report.
    Keywords: non-financial reporting, extractive industry, non-financial declaration (statement), regulation
    JEL: M4 M41
    Date: 2019
  7. By: Van Der Stede, Wim
    JEL: M40
    Date: 2019
  8. By: Lips, Wouter
    Abstract: This article investigates the BRICs’ involvement in the adoption of Automatic Exchange of Information (AEoI) by the G20 and the Organisation for Economic Cooperation and Development (OECD) as a major breakthrough in the global fight against tax evasion. Our main questions concern the BRICs’ willingness to accept AEoI, and their agreement to the Western-dominated OECD as its institutional forum. First, we examine the domestic drivers for BRICs’ participation, as their statist model of capitalism reveals strong disincentives to join this regime and the fact that the budgetary consequences of the global financial crisis were less severe than in Western states. We argue that their agreement on AEoI results more from their persistent balance-of-payments vulnerability to illicit capital than from fiscal weakness, while also discussing the possibilities for mock compliance. Second, we review the role of the non-reciprocal US foreign account tax compliance act (FATCA) in shaping the BRICs’ preference for a multilateral AEoI-regime centred around the OECD’s Common Reporting Standard (CRS). Last, we show that the BRICs’ acceptance of the OECD resulted from pragmatic interests and receiving ownership over the process, together with the absence of coercive mechanisms within the CRS-regime that could fundamentally undermine their sovereignty in this domain.
    Date: 2019–05–02

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