nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2022‒10‒24
eight papers chosen by

  1. Supreme Audit Institutions Independence Index By World Bank
  2. Theorizing the economy of traces: from audit society to surveillance capitalism By Power, Michael
  3. CBO’s Use of the Income and Payroll Tax Offset in Its Budget Projections and Cost Estimates By Congressional Budget Office
  4. Profit Taxation, R&D Spending, and Innovation By Andreas Lichter; Max Löffler; Ingo E. Isphording; Thu-Van Nguyen; Felix Poege; Sebastian Siegloch
  5. Examining the Factors That Affect the Loss of Tax Disputes in the Tax Court By Mega Nurmala Sari
  6. Corporate Tax Shields and Capital Structure: Levelling the Playing Field in Debt vs Equity Finance By Cao, Yifei; Whyte, Kemar
  7. Corporate Taxation in Open Economies By Radek Šauer
  8. Taxation and Migration by the Super-Rich By Advani, Arun; Burgherr, David; Summers, Andy

  1. By: World Bank
    Keywords: Finance and Financial Sector Development - Financial Regulation & Supervision Governance - Governance and the Financial Sector Governance - National Governance Private Sector Development - Corporate Governance Public Sector Development - Public Sector Corruption/Anticorruption Measures
    Date: 2021–07
  2. By: Power, Michael
    Abstract: This essay is a conversation between Shoshana Zuboff’s theory of surveillance capitalism, Mikkel Flyverbom’s conceptualization of the hyper-visibility afforded by digital architectures, and my own ‘analog’ theory of accounting dynamics in the ‘audit society’. Drawing upon trends in accounting practice and research I develop a number of inflection points which define theoretical tensions between the concepts of audit society and surveillance capitalism. These tensions suggest that theoretical innovation is required in the face of: the accelerating constitution of organizations by platforms and their processes – ‘platformization’; the constitution of human agents as data-driven subjects of these data architectures – ‘cyborgization’; and the reconstruction of the social sciences by a pervasive data positivism in which accounting becomes ‘accountics’. The exploration of these three inflection points reveals the deep operational logic of surveillance capitalism as an ‘economy of traces’ and traceability. Zuboff’s challenge of a political dystopia governed by technology giants and Flyverbom’s image of a society ‘overlit’ by digital architectures necessitate a re-specification of the audit society dynamics that I have previously theorized. The re-specification that I propose in this essay is a form of a critical ‘traceology’ which takes as its focus the ongoing production of all manner of traces and how they make up organizations, people and forms of knowledge.
    Keywords: accountics; accounting; algorithm; audit society; cyborg; data architecures; digitalization; platforms; surveillance capitalism; security; traces; traceology; Sage deal
    JEL: M40
    Date: 2022–07
  3. By: Congressional Budget Office
    Abstract: Excise taxes and other types of “indirect†taxes reduce the revenues derived from individual and corporate income taxes and payroll taxes. When CBO and the Joint Committee on Taxation estimate the budgetary effects of changes in indirect taxes, they generally reduce the estimated change in indirect tax revenues by applying an income and payroll tax offset.
    JEL: H20 H24 H25
    Date: 2022–10–04
  4. By: Andreas Lichter (DICE and HHU Düsseldorf); Max Löffler (Maastricht University); Ingo E. Isphording (IZA – Institute for Labor Economics); Thu-Van Nguyen (Stifterverband Essen); Felix Poege (Technology & Policy Research Initiative, Boston University and Max Planck Institute for Innovation and Competition); Sebastian Siegloch (University of Cologne)
    Abstract: We study how business taxes affect establishments’ R&D activities. Relying on geocoded panel data targeting the universe of R&D-active establishments in Germany, we exploit around 7,300 changes in the local business tax rate over the period 1987 2013 for identification. Using event study techniques, we find a sizable negative and statistically significant effect of an increase in the local business tax on establishments’ total R&D spending and patents filed. Zooming into the process of innovation production, we uncover substantial heterogeneity in the impact of business taxation for various R&D inputs, among establishment characteristics, and for different types of research projects.
    Keywords: corporate taxation, firms, R&D, innovation, patents
    JEL: H25 H32 O31 O32
    Date: 2022–09
  5. By: Mega Nurmala Sari (Faculty of Economics and Business, Universitas Indonesia, Indonesia Author-2-Name: Riatu Mariatul Qibthiyyah Author-2-Workplace-Name: Faculty of Economics and Business, Universitas Indonesia, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - The high tax administration loss rate sparked various speculations in Society. This study aims to determine the factors that led to the defeat of the tax administration in the Indonesian Tax Court. Methodology/Technique - Simple random sampling is used to obtain 1,000 samples of decisions on appeal disputes which is three times the minimum sample size. The logit model is used to find out whether the independent variable affects the dependent variable. The linear probability model is also used to test whether the Logit Model is robust. Findings - The estimation of results shows that the interaction between the tax dispute resolution period and the type of tax, as well as the number of representatives of the tax authorities, had a positive and significant impact on the loss of the tax administration in the prosecution. Novelty - No economic study has comprehensively analyzed the determinants of administrative defeat in the Indonesian Tax Court. This study uses data that have not been used in previous studies. The information includes evidence at audits/objections and appeals, types of taxes, tax dispute resolution periods, interactions between dispute resolution periods and evidence at audits/objections and requests, interactions between dispute resolution periods and types of taxes, interactions between periods dispute resolution, types of taxes and evidence at examination/objection and appeal, initial value, gender of judges, representatives of taxpayers and representatives of tax authorities in court. Type of Paper - Empirical."
    Keywords: Tax dispute; appeal decision; influencing factors; Tax Authorities defeat; Tax Court.
    JEL: G18 K41
    Date: 2022–09–30
  6. By: Cao, Yifei; Whyte, Kemar
    Abstract: A common feature within most corporate income tax systems is that the cost of debt is deductible as an expenditure when calculating taxable profits. An unintended consequence of this tax distortion is the creation of under-capitalized firms - raising default risk in the process. Using a difference-in-differences approach, this paper shows that a reduction in tax discrimination between debt and equity finance leads to better capitalized banks. The paper exploits the exogenous variation in the tax treatment of debt and equity created by the introduction of an Allowance for Corporate Equity (ACE) system in Italy, to identify whether an ACE positively impacts banks' capital structure. The results demonstrate that a move to an unbiased corporate tax environment increases bank capital ratios, driven by an increase in equity rather than a reduction in lending activities. The change also leads to a reduction in risk taking for ex-ante low capitalized banks. Overall, these results suggest that the ACE could be a valuable policy instrument for prudential bank regulators.
    Keywords: Bank capital structure, Banking regulation, Tax shields, Banking stability
    JEL: G21 G28 G32 H25
    Date: 2022–10
  7. By: Radek Šauer
    Abstract: This paper analyzes the macroeconomic impact of corporate taxation. The analysis is conducted in a quantitative two-country model. In the first step, the paper describes the long-run effects of corporate taxation. A reduction in the corporate-income tax rate increases GDP, wages, consumption, investment, and business density. The trade balance is at the same time negatively affected. Firms headquartered in a country which lowers its corporate tax become internationally less active and instead focus more on their domestic market. In the second step, the paper presents adjustment dynamics that are induced by a corporate-tax reform. The dynamic response of the economy can substantially differ when comparing shorter and longer time horizons.
    Keywords: corporate taxation, macroeconomy, heterogeneous firms, multinationals, international spillovers
    JEL: E62 F42 H25
    Date: 2022
  8. By: Advani, Arun (University of Warwick, CAGE, the Institute for Fiscal Studies (IFS), and the LSE International Inequalities Institute (III)); Burgherr, David (LSE III.); Summers, Andy (London School of Economics, III, and CAGE)
    Abstract: Using administrative data on the globally connected super-rich in the UK, we study the effect of a large tax reform on migration behaviour. Prior to 2017, o shore investment returns for `non-doms' - individuals tax resident in the UK but with connections to other countries - were untaxed. Average off shore investment returns for these individuals exceeded £420,000; even without considering other types of income, this puts them in the top 0.2% of the population. A reform in 2017 brought long-stayers and UK-born non-doms into the standard tax system, reducing their effective net of average tax rate by between 8.8% and 13.0%. We nd that migration responses were limited : our central estimate of the migration elasticity is 0.02, and across a range of specifications we can rule out elasticities larger than 0.5. Using reforms for the UK-born super-rich who were living abroad, we find that migration elasticities are limited even for recent arrivals, for whom our central estimate is 0.18. Assuming similar elasticities for all non-doms, abolition of the preferential regime would increase tax revenue collected from non-doms by £3.2bn (84%).
    Keywords: taxation; migration; capital income; inequality; mobility JEL Codes: F22 ; H31 ; J61

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