nep-pub New Economics Papers
on Public Finance
Issue of 2014‒05‒09
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Property Tax and Fiscal Discipline in OECD Countries By Andrea Filippo Presbitero; Agnese Sacchi; Alberto Zazzaro
  2. Do corporate tax cuts reduce international profit shifting By Brandstetter, Laura
  3. Size effect, neighbour effect and peripheral effect in cross-border tax games By Liu, Xin
  4. The effect of tax preparation expenses for employees: Evidence from Germany By Blaufus, Kay; Hechtner, Frank; Möhlmann, Axel

  1. By: Andrea Filippo Presbitero (International Monetary Fund, Universit… Politecnica delle Marche - MoFiR); Agnese Sacchi (Faculty of Economics - Universitas Mercatorum (Rome, Italy);, Governance and Economics Research Network, University of Vigo (Spain)); Alberto Zazzaro (Universit… Politecnica delle Marche, MoFiR)
    Abstract: This paper investigates the effects of property taxation on fiscal discipline for a sample of OECD countries over the period 1973-2011. We find that aggregate property taxation in total tax revenues is not statistically correlated with the primary surplus-to-GDP ratio. In contrast, a greater reliance on property taxes pertaining to sub-national governments contributes to fiscal discipline, suggesting that fiscal decentralization should favor responsive tax base instruments.
    Keywords: Fiscal imbalance, Property tax, Sub-national governments, Tax decentralization
    JEL: E62 H62 H71 H77
    Date: 2014–05
  2. By: Brandstetter, Laura
    Abstract: This paper analyzes whether a corporate tax cut reduces profit shifting to low-tax countries. I use firm-level data of 2,812 German corporations around the Business Tax Reform in 2008. Applying a difference-in-differences framework with a one-onone matching strategy, which compares earnings of multinational and domestic corporations, I do not find empirical evidence that even a 10 percentage points cut in the business tax rate leads to a reduction of profit shifting activities. --
    Keywords: corporate taxation,international profit shifting
    JEL: F23 H25 H26
    Date: 2014
  3. By: Liu, Xin
    Abstract: This paper analyses a game theoretic model of tax competition in a system where tax authorities are revenue optimisers and countries are differentiated by size. The model accommodates more than two countries. In equilibrium, larger countries set higher tax rates non-cooperatively. By applying the Hotelling linear model, this paper gives examples where the size effect, neighbourhood effect, and peripheral effect coexist and push up the tax rate in equilibrium. --
    Keywords: tax competition,cross-border shopping,Nash equilibrium,peripheral effects
    JEL: H20 H71 H73 R51
    Date: 2014
  4. By: Blaufus, Kay; Hechtner, Frank; Möhlmann, Axel
    Abstract: Tax preparation firms advertise their services as a way to save taxes. To investigate this subject, we use a panel of German income tax accounting data, consisting of employees and other taxpayers with non-business income, to explore the relationship between expenses for tax preparation and tax liabilities. We find a negative link with expenses exceeding estimated tax savings. Specifically, one additional Euro yields an estimated tax savings of 72 cents in an OLS regression and 24 cents in a fixed-effects regression. This finding indicates that cross-section estimates are upward biased. The magnitude of the effect implies that tax preparation expenses are not worthwhile from a tax saving perspective alone. In consideration of time savings, combined tax and time savings also do not exceed expenses for any income quintile. The result is robust to various alternative specifications such that in no setting do the pecuniary and time savings exceed the tax preparation expenses. Overall, our findings suggest an important benefit of tax preparation expenses beyond tax and time savings. --
    Keywords: response to taxation,tax advisors,tax return preparation,tax preparation expenses
    JEL: H24 H31
    Date: 2014

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