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on Accounting and Auditing |
| By: | Leon Bettendorf; Michael P. Devereux; Albert van der Horst; Ruud de Mooij |
| Abstract: | This paper explores the economic consequences of proposed EU reforms for a common consolidated corporate tax base. The reforms replace separate accounting with formula apportionment as a way to allocate corporate tax bases across countries. To assess the economic implications, we use a numerical CGE model for Europe. It encompasses several decision margins of firms such as marginal investment, FDI decisions, and multinational profit shifting. The simulations suggest that consolidation does not yield substantial welfare gains for Europe. The variation of effects across countries is large and depends on the choice of the apportionment formula. Consolidation with formula apportionment does not weaken incentives for tax competition. Tax competition instead offers a rationale for rate harmonisation, in addition to base harmonisation. |
| Keywords: | Corporate Tax Harmonisation; Common Consolidated Corporate Tax Base; Applied General Equilibrium; European Union |
| JEL: | C68 F23 H25 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:133&r=acc |
| By: | Michael P. Devereux (Oxford University Centre for Business Taxation); Simon Loretz (Oxford University Centre for Business Taxation) |
| Abstract: | We propose a methodology for assessing the neutrality of corporate tax reform proposals in an open economy. The methodology identifies variation in effective tax rates to assess the proximity of a tax system to capital export neutrality (CEN) and to market neutrality (MN, which holds if all potential competitors in a single market face the same effective tax rate). We apply the methodology to two reform options in the EU. Optional international loss consolidation would move the EU tax system away from both CEN and MN. The proposed common consolidated corporate tax base (CCCTB) has mixed effects which depend on the precise comparisons made. |
| Keywords: | Corporate Taxation; International Loss Consolidation; Ap- portionment Rules; Common Consolidated Tax Base; Neutrality; |
| JEL: | H25 H87 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:1007&r=acc |
| By: | Thomas Hemmelgarn (European Commission); Gaetan Nicodeme (European Commission) |
| Abstract: | The 2008 financial crisis is the worst economic crisis since the Great Depression of 1929. It has been characterised by a housing bubble in a context of rapid credit expansion, high risk-taking and exacerbated financial leverage, ending into deleveraging and credit crunch when the bubble burst. This paper discusses the interactions between tax policy and the financial crisis. In particular, it reviews the existing evidence on the links between taxes and many characteristics of the crisis. Finally, it examines some possible future tax options to prevent such crises. |
| Keywords: | Taxation, financial crisis, banking crisis, fiscal incentives |
| JEL: | E62 F21 F30 G10 H20 H30 H50 H60 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:tax:taxpap:0020&r=acc |
| By: | Katharina Finke (Centre for European Economic Research (ZEW)); Jost H. Heckemeyer (Centre for European Economic Research (ZEW)); Timo Reister (Centre for European Economic Research (ZEW),); Christoph Spengel (University of Mannheim) |
| Abstract: | The German corporate tax reform of 2008 has brought about important cuts in corporate tax rates, which were at the same time accompanied by significant changes in the determination of the tax base for both major German corporate taxes - corporate income tax and trade tax. The reform followed the distinct and internationally prevalent pattern of tax rate cut cum base broadening. Its implications are thus not unique to Germany. Especially in view of the current economic crisis, questions on the distribution of the tax burden among firms of different characteristics have arisen and still remain at the heart of the academic and political debate in Germany and other countries. In this paper we present a new corporate microsimulation model, ZEW TaxCoMM, which allows for the coherent micro-based analysis of revenue implications of tax reforms and the distribution of tax consequences among heterogeneous firms. The model processes firm-level financial accounting input data and derives the firm specific tax base and tax due endogenously in accordance with the tax code. To smooth out distortions between the sample and the population of German corporations, the sample is extrapolated on the basis of the corporate income tax statistic. The simulation results show inter alia that less than 5% of all corporations did not benefit from the reform. The average annual relief as measured by the average decline in the effective tax burden on cash flows amounts to 2.8 percentage points for large corporations and to 6 percentage points for small corporations. Furthermore, the results illustrate that firms with low profitability, high debt ratio and high capital intensity benefit least from the reform. As to tax revenues, the reform induced decrease amounts to € 9.8 billion and the trade tax gains fiscally in importance. |
| Keywords: | tax reform, microsimulation, tax policy evaluation |
| JEL: | H25 H32 K34 C8 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:1005&r=acc |
| By: | Henselmann, Klaus; Schrenker, Claudia; Schneider, Sebastian |
| Abstract: | In January 2009, the law on the reform of the inheritance tax and valuation law (German) came into force. As a result, the valuation of shares in non-listed corporations was fundamentally changed. The paper compares and analyzes different enterprise values through the application of different valuation methods. -- |
| Keywords: | Unternehmensbewertung,Unternehmenswert,Bewertungsmethoden,Bewertungsverfahren,Ertragswertverfahren,vereinfachtes Ertragswertverfahren,IDW S 1,Börsenwert,Erbschaftsteuer,Schenkungsteuer,Reform,Business Valuation,Enterprise Value,Valuation Methods,Capitalised Earnings Method,Simplified Capitalised Earnings Method,IDW S 1,Stock Exchange Value,Inheritance Tax,Gift Tax,Reform |
| JEL: | G18 G38 K34 M41 M42 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fauacc:20103&r=acc |
| By: | Ruud de Mooij; Michael Devereux |
| Abstract: | We assess the quantitative impact of two reforms to corporation tax, which would eliminate the differential treatment of debt and equity: the allowance for corporate equity (ACE) and the comprehensive business income tax (CBIT). We investigate the impact of these reforms on various decision margins, using an applied general equilibrium model for the EU calibrated with recent empirical elasticities. The results suggest that, if governments adjust statutory corporate tax rates to balance their budget, profit shifting and discrete location render CBIT more attractive for most individual European countries. European coordination makes a joint ACE more, and a joint CBIT less, efficient. A combination of ACE and CBIT is always welfare improving. |
| Keywords: | Corporate tax reform; European Union; Tax coordination; Computable General Equilibrium model; ACE; CBIT |
| JEL: | D58 H25 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:128&r=acc |
| By: | Leon Bettendorf; Albert van der Horst; Ruud de Mooij; Hendrik Vrijburg |
| Abstract: | This article assesses the economic implications of the introduction of consolidation with formula apportionment in the European Union under alternative enhanced cooperation agreements. We .nd that the consolidation is likely to yield a small aggregate welfare gain in Europe, but that not all countries bene.t. A coalition of winning countries reduces the welfare gain and may induce a process of adverse selection which distroys the possibility of cooperation. We .nd that a coalition of similar countries (in terms of the size of their multinational sector) is more feasible in achieving agreement and is actually preferred by those countries over a European-wide reform. |
| Keywords: | Corporate Tax Harmonisation; Common Consolidated Corporate Tax Base; Enhanced Cooperation Agreements; Applied General Equilibrium; European Union |
| JEL: | C68 F23 H25 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:132&r=acc |
| By: | Ojo, Marianne |
| Abstract: | This paper is structured in accordance with identified components which are considered to be essential to the successful implementation of the (two fold) topics of discussion of this paper, namely, monitoring and liquidity risk measurements. The importance of successfully communicating results obtained from monitoring and measuring such risks, and the role of corporate governance in ensuring such effective communication, constitutes a recurring theme throughout this paper. The identified components are as follows: i) Corporate governance (ii) Internal controls (iii) Disclosure (iv) Management of risk (v) Substance over form (vi) Transparency As well as highlighting the interdependence of these components, the paper also aims to accentuate the importance of individual components. Whilst no hierarchy of importance is assigned to these components, corporate governance and internal controls are two components which are analysed in greater depth (than other components). Furthermore, corporate governance could be accorded a status of greater importance than internal controls having regard to the fact that whilst internal controls relate to a very vital control aspect of an organisation, corporate governance relates to all processes – be it decision making, control, production, performance, within a company/bank. The paper will also attempt to demonstrate that it is possible to implement a system of regulation which combines increased formalised procedures and/or detailed rules - whilst giving due consideration to the substance of transactions. |
| Keywords: | corporate governance; internal controls; monitoring; liquidity; regulation |
| JEL: | K2 G3 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21847&r=acc |
| By: | Blomquist, Sören (Uppsala Center for Fiscal Studies); Simula, Laurent (Uppsala Center for Fiscal Studies) |
| Abstract: | Almost all theoretical work on how to calculate the marginal deadweight loss has been done for linear taxes and for variations in linear budget constraints. This is quite surprising since most income tax systems are nonlinear, generating nonlinear budget constraints. Instead of developing the proper procedure to calculate the marginal deadweight loss for variations in nonlinear income taxes a common procedure has been to linearize the nonlinear budget constraint and apply methods that are correct for variations in a linear income tax. Such a procedure leads to incorrect results. The main purpose of this paper is to show how to correctly calculate the marginal deadweight loss when the income tax is nonlinear. A second purpose is to evaluate the bias in results that obtains when the traditional linearization procedure is used. We perform calculations based on the 2006 US tax system and find that the relative deadweight loss caused by increasing existing tax rates is large but less than half of Feldstein’s (1999) estimates for the 1994 tax system. |
| Keywords: | Deadweight Loss; Taxable Income; Nonlinear Budget Constraint |
| JEL: | D61 H21 H24 H31 |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2010_001&r=acc |
| By: | Hans Jarle Kind (Norges Handelshøyskole, Bergen); Marko Koethenbuerger (Department of Economics, University of Copenhagen); Guttorm Schjelderup (Norges Handelshøyskole, Bergen) |
| Abstract: | Two-sided platform firms serve distinct customer groups that are connected through interdependent demand, and include major businesses such as the media industry, banking, and the software industry. A well known result of tax incidence is that consumers of a more heavily taxed good pay a higher price and thus buy less of the good. The present paper shows that this result need not hold in a two-sided market. On the contrary, a higher ad valorem tax may lower end-user prices and spur sales. Thus, two-sided platform firms may not at all engage in tax shifting via price increases. We further show that a higher ad valorem tax may undermine a firm's incentive to differentiate its product from that of its competitors. Finally, we demonstrate that the effects of increasing specific taxes may be the opposite of those of increasing value added taxes. |
| JEL: | D4 D43 H21 H22 L13 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:kud:epruwp:10-02&r=acc |
| By: | Almas Heshmati; Dan Johansson; Carl Magnus Bjuggren (Technology Management, Economics and Policy Program(TEMEP), Seoul National University) |
| Abstract: | We analyze the effects of effective corporate tax rates on the size distribution of firms. In modelling this relationship we account for conditional variables as well as unobservable time and industry effects. A number of hypotheses are tested concerning heterogeneity in the impact of effective corporate tax rates on the size distributions of firms with regard to firm size class, industry and time. The results are based on data covering the whole Swedish economy for the period 1973-2002. The descriptive results suggest that effective corporate tax rates differ by firm size, industry and over time. Application of t-tests demonstrate inequality in mean and variance of effective corporate tax rates between major size classes but not within major size classes: smaller firms report a higher effective corporate tax rate than larger firms. The t-tests also demonstrate inequality in mean and variance of effective corporate tax rates between industrial sectors: service sector reports a higher effective corporate tax rate than production sector. The regressions show effective corporate tax rates to have: a negative effect on the size distribution of large firms, negative effect on transportation, financing and service sector and a positive effect on manufacturing, electricity and on production sector. We conclude that effective corporate tax rates affect the size distribution of firms as well as the composition of industries. |
| Keywords: | composition of industries, corporate taxes, effective corporate tax rates, size distribution of firms |
| JEL: | D21 H25 H32 L11 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:snv:dp2009:200923&r=acc |
| By: | Dean Baker; Robert Pollin; Travis McArthur; Matt Sherman |
| Abstract: | This joint report by CEPR and the Political Economy Research Institute (University of Massachusetts, Amherst) gives an estimate of $177-354 billion in revenue that could be raised by taxing financial transactions in the United States. |
| Keywords: | financial taxes, financial transactions, economic crisis, financial crisis |
| JEL: | G G1 G18 G2 G24 G28 G3 G38 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2009-50&r=acc |