nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2020‒06‒22
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. When Debit=Credit. The balance constraint in bookkeeping, its causes and consequences for accounting By Renes, S.
  2. Taxpayer responsiveness to taxation: Evidence from bunching at kink points of the South African income tax schedule By Neryvia Pillay Bell
  3. The relationship of the territoriality of corporate taxation and the economy By Jean-Marie Monnier
  4. Determinants of investment in tangible and intangible fixed assets By Miguel García-Posada; Álvaro Menéndez; Maristela Mulino

  1. By: Renes, S.
    Abstract: This paper studies the balance constraint (debit=credit) in bookkeeping, its causes and its consequences for accounting. Balance in the ledger is shown to: 1) imply balance in journal entries and vice versa; 2) link the value definitions in the earnings statement and balance sheet; 3) have direct implications for valuation puzzles encountered in accounting, like accounting for OCI or stock-based compensation, and the difference between earnings or balance-sheet approaches to valuation. These system-wide effects on accounting highlight a design question: why do we have the balance constraint in bookkeeping? Backward-engineering shows 6 axioms that logically lead to double-entry bookkeeping. The balance constraint follows from the existence of a residual account: owner’s equity. A class of equivalently powerful record keeping systems is shown to exist. These systems use double-entry bookkeeping without the monetary-unit assumption and can be used to record other outputs of the organization, like societal impact. These systems can be implemented in relational databases, a blockchain, or a different technology all together. The discussion covers links with other mathematical descriptions of bookkeeping and potential avenues for future research in the mathematics of bookkeeping.
    Keywords: Axioms for bookkeeping, duality, bookkeeping system design, mathematics, of record keeping.
    Date: 2020–06–12
  2. By: Neryvia Pillay Bell
    Abstract: The author applies the bunching methodology to South African administrative tax data over the period from 2011 to 2017 to investigate the responsiveness of individual taxpayers to changes in marginal personal income tax rates. She finds significant evidence of bunching among the self-employed but no evidence of bunching among wage earners. Among the self-employed, bunching is greatest at the highest kink in the income tax schedule and smallest at the lowest kink. Female self-employed exhibit greater bunching behaviour than male self-employed, and responsiveness appears to decrease with age.
    Keywords: bunching, elasticity of taxable income, personal income tax, South Africa
    Date: 2020
  3. By: Jean-Marie Monnier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The consequence of the revolution of internet and digital is the erosion of taxe bases. The creation of value has shift from the production of tangibles to intangibles. This resulted in the disparition of tax bases. But the recognition of this phenomenon does not imply to radically question the relevance of tax instruments inherited from the fordist period. It may simply lead to the proposition of new rules or new taxes aiming to compensate revenue losses. The first part of the paper is devoted to a review of the economic approaches of the taxation of digital for which the mobility of activities and the erosion of tax bases are essential issues. This immediately puts the tax issue on an international level and raises the question of the taxation of rents massively captured by digital companies. In the second part, and after a brief presentation of the main characteristics of the tax system inherited from the Fordist period, we study the main developments that took place during this period. Finally, we emphasize the main lines of the changes affecting capitalism. They cause the present lack of adjustment between the economic bases of capitalism and the tax system. This new capitalism works by deterritorializing the tax bases.
    Abstract: La révolution de l'internet et du numérique provoque l'érosion des bases taxables. Le déplacement de la création de valeur des biens tangibles vers des productions intangibles ou immatérielles aboutit à la disparition de l'assiette de l'impôt. Mais l'identification de ce phénomène ne débouche pas nécessairement sur une mise en cause radicale de la pertinence des instruments fiscaux hérités de la période fordiste. Elle peut aussi conduire simplement à la proposition de règles nouvelles ou de prélèvements nouveaux compensant les pertes de recettes. La première partie de l'article est consacrée à une revue des approches économiques de la fiscalité du numérique pour lesquelles la mobilité des activités et l'érosion des bases taxables sont un enjeu essentiel. Cela place immédiatement la question fiscale à un niveau international et interpelle sur la taxation des rentes massivement captées par les entreprises du numérique. Dans une seconde partie et après une rapide présentation des caractéristiques de l'architecture des prélèvements obligatoires héritées de la période fordiste, on étudie les principales évolutions intervenues au cours de cette période. Enfin on distingue les caractéristiques majeures de la mutation du capitalisme en cours qui contribuent à l'actuel défaut d'ajustement entre les nouvelles bases économiques du capitalisme et le système fiscal. Ce nouveau capitalisme fonctionne par déterritorialisation des bases taxables.
    Keywords: Digital economy,Corporate taxation,Global taxes,Taxable bases,New capitalism,Economie numérique,Impôt sur les sociétés,Taxes globales,Assiette taxable,Nouveau capitalisme
    Date: 2019–05–01
  4. By: Miguel García-Posada (Banco de España); Álvaro Menéndez (Banco de España); Maristela Mulino (Banco de España)
    Abstract: We investigate which firm characteristics are associated with investment in tangible and intangible fixed assets, paying special attention to the case of R&D, and which funding sources are used for each type of investment. Regarding firm characteristics, we find that younger and more profitable firms tend to invest more in all asset types. In the case of size, larger firms invest more in R&D and intangibles but less in tangible fixed assets. In addition, there is a concave relationship between leverage and investment. Regarding funding sources, we find that cash flow is the most important source of funding for intangibles and R&D, whereas financial debt is the most important funding source for tangible fixed assets. Stock issues are used to fund R&D and, especially, tangible fixed assets. Firms use cash holdings to smooth investment in R&D.
    Keywords: investment, tangible fixed assets, R&D, intangibles
    JEL: G31 G32 O32
    Date: 2020–02

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