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on Public Finance |
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Issue of 2019‒12‒16
four papers chosen by |
| By: | Gawehn, Vanessa |
| Abstract: | In this paper, I review the empirical literature in the intersection of banks and corporate income taxation that emerged over the last two decades. To structure the included studies, I use a stakeholder approach and outline how corporate income taxation plays into the relation of banks and their four main stakeholders: bank regulators, customers, investors and tax authorities. My contribution to the literature is threefold: First, I contribute by providing, to the best of my knowledge, a first comprehensive review on this topic. Second, I point to areas for future research. Third, I deduce policy implications from the studies under review. In sum, the studies show that taxes distort banks' pricing decisions, the relative attractiveness of debt and equity financing, the decision to report on or off the balance sheet and banks' investment allocations. Empirical insights on how tax rules affect banks' decision-making are helpful for policymakers to tailor suitable and sustainable tax legislation directed at banks. |
| Keywords: | corporate income taxes,banks,stakeholder approach,decision-making process |
| JEL: | G21 H22 H25 M41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:247&r=all |
| By: | Sabrina T. Howell; Filippo Mezzanotti |
| Abstract: | A central issue in public finance is the tradeoff between maintaining tax revenues and using the tax code to incentivize particular economic activities. One important dimension of this tradeoff is whether incentive policies are used in practice as policymakers intend. This paper examines one particular tax program that many U.S. states use to stimulate entrepreneurship. Specifically, angel tax credits subsidize wealthy individuals’ investments in startups. This paper finds that these programs have no measurable effect on local entrepreneurial activity or beneficiary company outcomes, despite increasing some measures of angel activity. This appears to reflect the programs failing to screen out financially unconstrained firms and often being used for tax arbitrage. Over 90 percent of beneficiary companies fall into at least one of three categories: a corporate insider received a tax credit; the company previously raised external equity; or the company is not in a high-growth sector. Notably, at least 33 percent of beneficiary companies include an investor receiving a tax credit who is an executive at the company. |
| JEL: | G0 G18 G24 G38 O3 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26486&r=all |
| By: | Ondrej Schneider (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 21, 110 00, Prague, Czech Republic) |
| Abstract: | This paper examines effects of political ideology of a governing party on fiscal outcomes, using data from eight Central and Eastern European countries in the 2001-2017 period. The analysis shows that there is a statistically significant effect of conservative governments on fiscal variables, namely they tend to reduce expenditures and improve fiscal balance by 0.4-0.7% of GDP. Conservative governments are found to reduce expenditures on social security and health care, but they tend to increase subsidies. This may be explained by their proximity to business interests that typically benefit from these subsidies. Our result suggest that while conservative governments do tend to reduce public spending and run smaller deficits, their impact on fiscal outcomes is more limited than they often claim. |
| Keywords: | fiscal policy, political parties, budget deficit, Europe |
| JEL: | E62 H10 H50 H62 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2019_37&r=all |
| By: | Leventi, Chrysa; Picos, Fidel |
| Abstract: | The 2010 Economic Adjustment Programme initiated a period of strict international supervision with respect to tax policy in Greece. The country implemented a large-scale fiscal consolidation package, aiming to reduce its public deficit below 3% of GDP by 2016. Since the beginning of the crisis, the provisions of the ‘Greek Programme’ have been revised several times, and personal income tax reform has figured prominently on almost each of the revision agendas. This paper aims to provide an assessment of the effects of the four major structural reforms that took place in Greece during and in the aftermath of the economic crisis; using microsimulation techniques, we simulate the (ceteris paribus) first-order impact of these reforms on the distribution of incomes, the state budget and work incentives, while also trying to identify the main gainers and losers of these policy changes. Our results suggest that all reforms had a revenue-increasing rationale, with the one of 2011 being designed to have the largest fiscal gains. The latter also strengthened redistribution and achieved the highest decrease in income inequality. The 2013 reform went to the opposite direction by reducing both the redistributive strength and the progressive nature of the Greek tax system. The striking discrepancies in the ways in which different household categories have been affected by the four reforms call for a deeper investigation of the possibility of moving towards more uniform personal income tax rules. |
| Date: | 2019–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em21-19&r=all |