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on Accounting and Auditing |
| By: | Paolo Brunori (University of Bari, Italy); Flaviana Palmisano (University of Luxembourg); Vito Peragine (University of Bari, Italy) |
| Abstract: | This paper addresses the problem of the normative evaluation of income tax systems and income tax reforms. While most of the existing criteria, framed in the utilitarian tradition, are uniquely based on information about individual incomes, this paper, building upon the opportunity egalitarian theory, proposes new equity criteria which take into account also the socio-economic characteristics of individuals. Suitable dominance conditions that can be used to rank alternative tax systems are derived by means of an axiomatic approach. Moreover, the theoretical results are used to assess the redistributive eects of an hypothetical tax reform in Romania through a microsimulation analysis. |
| Keywords: | income inequality, inequality of opportunity, tax reforms, microsimulation, progressivity, horizontal equity |
| JEL: | D63 E24 O15 O40 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipu:wpaper:12&r=acc |
| By: | Valkonen, Tarmo; Kauppi, Eija; Suni, Paavo |
| Abstract: | This study simulates with two dynamic models the macroeconomic and public finance outcomes of a reduction in the corporate income tax rate in Finland. FOG-model is a dynamic CGE model, which is calibrated to the Finnish economy. NiGEM is a multi-country macroeconometric model. The results show that a surprising cut in the corporate income tax rate falls after all adjustments both on new investments and the yield of existing capital. The losses in the tax revenues are capitalized in the market value of the firms, of which many are partly foreign-owned. Investments increase, but the influence in production is mitigated by low reaction of labour supply. Wages increase as well as the public expenditure relates to wages. Gross profits do dot change much. The dynamic effects on tax bases compensate for 30–50 per cent of the losses in the corporate income tax revenues, depending on the model used. If also the increased public expenditure is considered, the compensation rate falls to 25–30 percent. If the tax rate cut is announced well in advance, both the macroeconomic and the public finance results are more favourable. The simulations do not consider the positive effects of profit shifting on corporate income tax revenues. |
| Keywords: | Corporate and capital income taxation, dynamic effects, CGE model, macroeconometric model |
| JEL: | H22 H25 C54 C68 |
| Date: | 2014–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:rif:report:41&r=acc |
| By: | Lovise Bauger |
| Abstract: | Against the background of recovering growth and remaining fiscal consolidation needs, reforming tax expenditures may offer a promising avenue to raise revenue and, at the same time, improve efficiency of the tax systems. The workshop, held by DG ECFIN on 23 October 2013, addressed the economic and budgetary aspects of tax expenditures, including reporting practices, and discussed the rationale for business tax incentives and the distributional effects of tax reliefs in personal income taxation. The workshop was organised in two sessions: "Tax expenditures: measurement and macroeconomic implications" and "Tax expenditures in direct taxation". The proceedings gather together the views on these various dimensions of tax expenditures expressed by academics, national policy-makers and international institutions during the workshop. |
| JEL: | E62 H23 H24 H25 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0523&r=acc |
| By: | Carlos A. Carrasco; Patricia Peinado (University of the Basque Country (UPV/EHU)) |
| Abstract: | We study the origin of European imbalances in the context of European integration. As a whole, the European Union and Eurozone have had nearly balanced external accounts. However, member countries have presented divergent positions. We analyse the factors underlying the presence of European external imbalances. Our results reveal the existence of a structural component of the current account. This compononent could be related to the economic structure and the non-price competitive advantages of each country. |
| Keywords: | current account, Eurpoean imbalances, European integration, competitiveness, catching-up |
| JEL: | E44 E65 F15 F32 H63 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fes:wpaper:wpaper71&r=acc |
| By: | Robert W.R. Price; Thai-Thanh Dang; Yvan Guillemette |
| Abstract: | This paper estimates the elasticities of government revenue and expenditure items with respect to the output gap for European Union (EU) countries. These elasticities are used by the European Commission, as part of the EU fiscal surveillance process, to calculate the semi-elasticity of the budget balance as a percentage of GDP with respect to the output gap. The study updates the earlier 2005 study of OECD economies using the most recent datasets and tax codes, the coverage being confined in this paper to the 28 EU member states, seven of which are not OECD members. The same basic two-step methodology is retained: revenue and expenditure elasticities with respect to the output gap being defined as the product of, first, the elasticities of individual revenue and expenditure items with respect to their bases and, second, the elasticities of these bases with respect to the output gap. A number of refinements and methodological improvements are made relative to the 2005 study. The revisions to individual elasticities relative to the 2005 vintage are significant in a number of cases but do not follow a clear pattern across countries, except for the elasticities of corporate income tax revenue which are revised up in most cases.<P>Nouvelles estimations de l'élasticité des taxes et dépenses pour la surveillance budgétaire de l'UE<BR>Cette étude estime les élasticités des composantes des revenus et des dépenses gouvernementales par rapport à l’écart de production pour les pays de l’Union Européenne (UE). Ces élasticités sont utilisées par la Commission Européenne, dans son processus de surveillance fiscale, pour calculer la semi-élasticité du solde budgétaire en pourcentage du PIB par rapport à l’écart de production. L’étude met à jour la précédente étude de 2005 couvrant les économies de l’OCDE en utilisant les données et les codes des impôts les plus récents, la couverture de l’étude étant confinée aux 28 pays membres de l’UE, dont sept ne sont pas membres de l’OCDE. La même méthodologie en deux temps est retenue : les élasticités des revenus et dépenses par rapport à l’écart de production étant définies comme le produit de, en premier, l’élasticité des composantes individuelles de dépense et de revenu par rapport à leurs bases et, en deuxième, l’élasticité de ces bases par rapport à l’écart de production. Un ensemble d’améliorations méthodologique sont apportés par rapport à l’étude de 2005. Les révisions des élasticités individuelles par rapport à celles de 2005 sont significatives dans nombre de cas, mais ne suivent pas de tendance particulière, exception faite des élasticités de l’impôt sur les bénéfices qui sont révisées à la hausse dans la plupart des cas. |
| Keywords: | automatic stabilisers, budget elasticity, fiscal surveillance, cyclically adjusted, ajustement cyclique, stabilisateurs automatiques, élasticité budgétaire, surveillance fiscale |
| JEL: | E62 H30 H60 |
| Date: | 2014–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1174-en&r=acc |
| By: | Alexandr Hobza; Stefan Zeugner |
| Abstract: | Based on a new database of bilateral financial flows among euro area countries and their major world partners, this paper explores the role of financial links in the accumulation and then adjustment of current account imbalances in the euro area. The data show that the geography of financial flows can differ quite markedly from trade flow patterns and suggest that the nexus between surpluses in the 'core' with deficits in the periphery went along financial rather than trade interlinkages. In particular, the data document the dominant role of 'core' countries in financing the euro area periphery's current account deficits before the financial crisis. In addition to direct financing, France and the UK acted as important intermediaries of financial flows from elsewhere, particularly outside of the euro area. Most of this financing took the form of debt instruments and increased the vulnerability of the recipient countries. In 2009/10, gross flows in the euro area contracted, while the net flows remained broadly unchanged. France became the periphery's main financier in 2009 and substituted the withdrawn flows from surplus countries, mainly Germany. Only when France reduced its exposure in a hasty asset withdrawal during 2011, the periphery had to rely on large ECB-mediated liabilities in order to refinance its liabilities. |
| JEL: | F32 F34 F36 F41 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0520&r=acc |
| By: | Justin Chircop (Lancaster University Management School, Lancaster University, UK); Zoltán Novotny-Farkas (Lancaster University Management School, Lancaster University, UK) |
| Abstract: | We investigate the economic consequences of the implementation of a particular aspect of Basel III in the U.S. Specifically, the Basel III proposal and the corresponding U.S. rule (hereafter referred to as the removal of the AOCI filter) to make the inclusion of unrealized fair value gains and losses of available-for-sale (AFS) securities in regulatory capital mandatory for all banks was highly controversial. The regulators’ view that such an inclusion would result in greater bank regulatory discipline was met with the concern that the regulatory costs of such regulatory tightening would exceed any possible benefits. Specifically, opponents of this rule argue that the inclusion of unrealized gains and losses would result in unrealistic volatility in regulatory capital and would force banks to make costly changes to their investment and risk management behavior. Using a comprehensive sample of U.S. banks we provide three pieces of evidence: First, we find that inclusion of unrealized fair value gains and losses on AFS securities for the period 2009 to 2013 would have resulted in increased volatility of regulatory capital. Second, bank share prices reacted negatively (positively) to pronouncements that increased (decreased) the likelihood that this rule would be implemented and these market reactions are strongly positively related to the relative amount of unrealized gains and losses. Third, we find evidence that banks affected by the AOCI filter removal (i.e., advanced approaches banks) changed their investment portfolio management. Specifically, affected banks reduce the maturity of their investment portfolio and decrease the proportion of AFS securities more significantly than unaffected benchmark banks. Interestingly, our results also suggest that affected banks reduce the size of their illiquid investment securities held in the AFS category more than unaffected banks. Given that we observe these changes before the actual implementation date of the new rule, we believe our results speak to the ex ante effects of fair value accounting on banks' risk taking behavior. |
| Keywords: | Banks, Fair Value Accounting, Prudential regulation, Regulatory Capital |
| JEL: | G21 M41 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:1426&r=acc |