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on Public Finance |
| By: | Jaan Masso; Jaanika Meriküll; Priit Vahter |
| Abstract: | Systems of profit taxation are undergoing continuous change and are subject to numerous studies. This paper estimates the effect of the corporate tax reform in Estonia in the year 2000, a reform that was unique anywhere. This reform nullified the taxation of retained earnings and retained the corporate income tax only on distributed profits. We estimate the effect of the reform on firms’ capital structure, liquidity, investments and productivity. The effect of the reform is identified by comparing the performance of Estonian firms that were affected with that of firms from Latvia and Lithuania, the two other Baltic states, which are economically fairly similar to Estonia and have correlated business cycles. We use firm-level financial data and the difference in differences and propensity score matching methods for our analysis. The results show that the corporate tax reform has resulted in increased holdings of liquid assets and lower use of debt financing; these results can be seen especially among the smaller companies affected by the liquidity constraints. These developments have contributed positively to firms’ survival during the recent global economic crisis. A positive effect on investment and labour productivity has also been found, especially among companies in the services sector. The results imply that distributed profit taxation schemes may have significant positive effects on economic development and firms’ survival. |
| Keywords: | corporate income tax, capital structure, liquidity, investments, productivity, comparative economic development |
| JEL: | H25 H32 O16 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:mtk:febawb:81&r=pub |
| By: | Kai A. Konrad; Florian Morath |
| Abstract: | We investigate redistributive taxation in a political economy experiment and determine how different patterns of social mobility affect the choices of redistributional taxes. In the absence of social mobility, voters choose tax rates that are very well in line with the prediction derived in the standard framework by Meitzer and Richard (1981). However, past or future changes in the income hierarchy affect the choice of the tax rate in the current period. The same is true for social mobility within the period to which the tax rate choice applies and for the case where the choice of the tax rate takes place behind, the veil of ignorance. Due to our design of the experiment, these strong effects of own social mobility cannot be attributed to social or other-regarding preferences. |
| Keywords: | redistribution, median voter, social mobility |
| JEL: | D72 D78 H20 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpi:wpaper:social_mobility_and_redistributive_taxation&r=pub |
| By: | Kurtis Swope (United States Naval Academy); Pamela Schmitt (United States Naval Academy); John Cadigan (Gettysburg College); Patrick Wayland (United States Navy) |
| Abstract: | We examine voluntary contributions in a two-stage public good experiment with ‘carryover.’ In two treatments, each subject’s second stage endowment is determined by the return from the public good in the first stage. We manipulate payoffs across these treatments so that, relative to our no-carryover baseline, earnings from either Nash play or Pareto Optimal play are held constant. The remaining two treatments maintain a constant endowment in each stage, but vary the marginal per capita return (MPCR) to contributions in the second stage. Our results indicate that carryover increases first stage contributions. Our implementation of carryover enables us to examine the effects of changing endowments and MPCR’s with a wider variety of parameter values than in the existing literature. Consistent with these studies, we find that MPCR and endowment effects are important determinants of subject contributions to the group account. While stage 1 contributions tend to increase in the presence of carryover, efficiency levels across both stages fall relative to the baseline due to the high potential payoffs from complete contribution in the second stage (due to higher endowments or MPCR levels). |
| Date: | 2011–02 |
| URL: | http://d.repec.org/n?u=RePEc:usn:usnawp:32&r=pub |