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on Accounting and Auditing |
| By: | Roberto Iacono; Bård Smedsvik |
| Abstract: | How do wealthy individuals respond to wealth tax reforms? We analyse behavioral responses to intensive margin variation in wealth tax rates, estimating the causal effects of an unprecedented municipal wealth tax reform in Norway. We leverage variation from the single-period municipal reform reducing the marginal tax rate (MTR) on wealth exclusively in the northern Norwegian municipality of Bo from 0.85% to 0.35%, since 2021. Mimicking the behaviour of a tax haven, Bo represents the first municipality in Norway to unilaterally reduce the municipal wealth tax rate since 1978. We document a significant 60% increase in average taxable wealth in response to a 1 percentage point drop in the wealth tax rate. The elasticity of taxable wealth increases to 68.7% when focusing exclusively on wealth taxpayers. We also estimate a significant but more modest 10% jump in the weighted mass of wealth taxpayers in the treated municipality. Migration effects of the reform dominate: internal mobility of wealthy taxpayers appears as the major behavioral response to the change in the net tax rate, accounting for a large portion of the post-treatment total net wealth in the treated municipality. While these effects are pronounced at the municipal level, they do not suggest a large-scale exodus at the national level, indicating that migration to avoid wealth taxation is not necessarily an inevitable outcome of localized preferential tax regimes. These results emerge in a context of third-party reported wealth data with minimal measurement error, limited evidence of bunching, highly enforced residence-based wealth taxation, and negligible out-migration rates. |
| Keywords: | wealth taxation, behavioral responses, tax avoidance, migration |
| JEL: | H20 H21 H24 H26 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11335 |
| By: | Bathusi Gabanatlhong (Institute of Economic Studies, Charles University, Prague, Czech Republic) |
| Abstract: | Country-by-country reporting aims to curb tax avoidance by multinational corporations and increase transparency in the tax system. This paper provides the first evidence of the effect of country-by-country in developing countries, focusing on the market response of the African stock market to this regulation. Using an event study design, the results indicate a significant negative market response for firms subject to CbCR requirements. Tax-aggressive firms show a pronounced significant negative response around the event date, suggesting that investors anticipate increased tax liabilities due to heightened scrutiny of their tax planning practices, potentially reducing future profits. Cross-listed firms exhibit a positive significant market response in foreign markets, while the broader domestic market shows a negative reaction, underscoring the variation in how foreign and domestic investors process similar information. This paper sheds light on how regulatory transparency influences investor sentiment across different markets. |
| Keywords: | country-by-country reporting, developing countries, event study, cross-listed firms, heterogeneous treatment effect, generalised random forest |
| JEL: | F23 H25 H26 G14 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:fau:wpaper:wp2024_37 |
| By: | Alessandro Dovis; Paolo Martellini |
| Abstract: | This paper studies optimal information disclosure in dynamic insurance economies with income risk in which an incumbent firm acquires more information about a consumer's persistent type than the rest of the market does. We find that if the incumbent can commit to long-term contracts but the consumer can walk away, the optimal disclosure prescribes no information revelation to maximize cross-subsidization. However, if the incumbent lacks commitment, no cross-subsidization of low-income consumers is feasible for any public information disclosure because of adverse selection. We show that partial information disclosure is typically optimal and it aims at implementing intertemporal consumption smoothing between the first period and the high-state in the second period, generating an inverse of the back-loading result in Harris and Holmstrom (1982). Lastly, we show that, without commitment, banning long-term relations can be beneficial to consumers. Our results can be used to analyze the consequences of policy proposals such as open banking and consumer data ownership. |
| JEL: | E0 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33051 |
| By: | Cörvers, Frank (RS: GSBE MORSE, RS: FdR Research Group ITEM, RS: GSBE - MACIMIDE, ROA / Human capital in the region); Baumann, Sabine (RS: GSBE other - not theme-related research, ROA / Education and transition to work) |
| Abstract: | This research was commissioned by the Foundation for Auditing Research (FAR). The motivation for the research is the growing shortage of accountants. In this report, we have tried to find answers to the questions: • How do we retain accountants working at accountancy firms? • What factors are important to prevent their outflow? To answer these questions, we interviewed a group of individuals composed by the FAR. This group consisted of chartered and non-registered accountants at different career stages and with different job levels, along with senior support staff within accountancy firms. The main objective was to rank the possible reasons for attrition by importance and thus identify the ‘root causes’. Although various nuances emerged during the interview, high workload and higher earnings elsewhere were mentioned as the main root causes of leaving the accountancy profession. |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umarep:2024004 |