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on Public Finance |
| By: | Dreßler, Daniel; Overesch, Michael |
| Abstract: | We analyze the impact of tax loss treatment on the size and structure of multinational investments. Basically, two effects of tax loss treatment can be expected. First, firms make their investment decisions in the face of potential future losses. Then, the various types of conceivable loss offset provisions affect investment decisions. Secondly, existing loss carryforwards resulting from losses in the past affect the tax rate-elasticity of current investment decisions. The empirical analysis is based on data of German multinationals. The data is taken from the MiDi database provided by the German Central Bank (Deutsche Bundesbank). Regarding the tax loss treatment of potential future losses, our regression results suggest that a short carryforward time limit lowers investments in industries having a high probability to make losses. Moreover, we find significant positive effects of group loss offsetting provisions on the size of investments and on the number of subsidiaries they are structured across. Concerning the effects of existing losses carried forward, we find a reduced tax rate elasticity of investments for companies shielded by existing losses. -- |
| Keywords: | Corporate Taxation,Loss Treatment,Group Taxation,Multinational Firms,Empirical Analysis |
| JEL: | F23 H25 H32 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10097&r=pub |
| By: | Jacob Goldin (Princeton University); Tatiana Homonoff (Princeton University) |
| Abstract: | Recent work suggests that consumers respond differently to taxes that are included in a good’s posted price and taxes that are added upon checking out at the register. This paper investigates how the government’s choice between these posted and register taxes affects the distribution of a tax’s burden. We show that when high- and low-income consumers differ in their attentiveness to register taxes, policymakers can lessen a tax’s regressivity by manipulating the fraction of a tax that is added at the register. We then turn to the case of cigarettes, and investigate whether high- and low-income consumers do in fact differ in their attentiveness to register taxes on that good. To answer that question, we link state and time variation in cigarette excise and sales tax rates to survey data about cigarette consumption from the Behavioral Risk Factor Surveillance System. Whereas both high- and low-income consumers respond to cigarette excise taxes (which appear in the posted price), we find that only low-income consumers respond to sales taxes on cigarettes (which are added at the register). Our results suggest that policymakers can ease the financial burden of cigarette taxes on the poor by levying such taxes at the register instead of including them in the cigarette’s posted price. |
| Keywords: | cigarette taxes, tax burden, smokers, consumer habits |
| JEL: | D12 D19 H25 I18 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:indrel:1278&r=pub |