TAXATION, AGGREGATE ACTIVITY AND ECONOMIC GROWTH: CROSS-COUNTRY EVIDENCE ON SOME SUPPLY-SIDE HYPOTHESES

Data from sixty-three countries are used to examine the impact of average and marginal tax rates on the level and growth of economic activity. Apparent negative effects of tax rates on growth disappear upon controlling for (1) potential endogeneity of average tax rates to per capita income and (2) the relation between economic growth and per capita income. However, controlling for average tax rates, increases in marginal tax rates have negative effects on the level of economic activity. This evidence supports the hypothesis that reductions in the "progressivity" of tax rates induce a parallel shift upward in the growth path.     

Income tax schedule and redistribution in direct democracies – the Swiss case

This study examines redistribution policy through personal income taxes in Swiss cantons over the period 1995–2011. In a first step, redistribution measures are estimated with the help of exhaustive administrative data. Redistribution is decomposed into average tax rate and tax progression. In a second step, we investigate the impact of direct democratic institutions and their usage on tax policy and redistribution. The results suggest that the effect of direct democracy on income tax redistribution is a multilayered process. First, the theoretical availability of direct democracy tools does not seem to have the same impact as the effective use of them. Second, fiscal referendums may – in the short term –reduce redistribution through lower tax rates and lead to less tax progression. Third, an increasing number of ballots on initiatives leads to more tax progression and more redistribution in the long run. It seems that the short-term dampening effects of fiscal referendums on redistribution may be overridden in the long run by the expansive effect of popular initiatives.     

Tax Uncertainty and Investment: A Cross-Country Empirical Examination

An empirical examination of uncertain tax policy is crucial to a full understanding of the interplay between taxes and investment, especially given the ambiguities in the limited theoretical literature. This article empirically investigates the impact on investment of volatility in effective tax rates on capital income in a cross-section of the 15 countries of the European Union, the United States, and Japan. Panel regression results suggest that the volatility of effective tax rates on capital income has a significant negative impact on investment per worker, with elasticities ranging from −0.012 to −0.029.     

DOES THE TAX SYSTEM FAVOR INVESTMENT IN HIGH-TECH OR SMOKE-STACK INDUSTRIES?

In this paper, we examine whether differential use of depreciable assets gives rise to differential tax treatment of high-technology industries relative to other industries. We calculate the total effective tax rate on a marginal investment in each of 34 assets, and weighting by the use of these assets, we calculate total effective tax rates for 73 industries. We find considerable variation within the high-tech sector and within the more traditional sector, but for the case of a taxable firm with a given debt/equity ratio, we do not find any systematic differences between overall rates in the two sectors.     

THE CULTURE OF CORRUPTION,TAX EVASION,AND ECONOMIC GROWTH

This study uses a dynamic general equilibrium model to quantify the effects of corruption and tax evasion on fiscal policy and economic growth. The model is calibrated to match estimates of tax evasion in developing countries. The calibrated model is able to generate reasonable predictions for net tax rates, the corruption associated with public investment projects, and the negative correlation between corruption and tax revenue. The presence of corruption and evasion is shown to have significant, but not large, negative effects on economic growth. The relatively moderate effects help explain the absence of a robust negative correlation between growth and corruption in cross‐country data. The model also implies that cracking down on tax evasion before addressing corruption can be a bad idea and that higher wages for public officials can improve welfare. (JEL H3, O4)     

THE CREDIT‐CHANNEL TRANSMISSION MECHANISM AND THE NONLINEAR GROWTH AND WELFARE EFFECTS OF INFLATION AND TAXES

With the credit‐channel effect driven by the central bank's open market operations, this paper's model easily gives rise to the nonlinear inflation‐growth nexus, which is evidenced by a number of cross‐country empirical studies. The threshold level of the inflation rate is found to be lower when tax rates are higher. The presence of the credit‐channel effect also provides the rationale for setting positive (and smaller than 1) tax rates on consumption, labor income, and capital income. The optimal tax rates rise as the inflation target declines. Under a fiscal policy rule where labor and capital income taxes move proportionally to each other, the optimal capital income tax rate could be higher than the optimal labor income tax rate. Under a sufficiently large central bank balance sheet, the credit‐channel effect will be so weak that inflation and all kinds of taxes are growth and welfare repressing. This provides a rationale for central banks that have implemented quantitative easing policies to shrink their balance sheets. (JEL E58, E62, O42)     

International Tax Competition: A Case for International Cooperation in Globalization

The liberalization of international financial flows and foreign direct investment has induced countries to use diverse measures to attract inflow of foreign capital and foreign direct investment, which is expected to have a positive effect on the growth of GDP and thus a positive effect on social welfare. Tax exemption, reduction of tax rate, tax holiday, or diverse subsidies are some of the most important measures used. In this paper we study international tax cooperation, i.e., countries change and especially reduce tax rate for corporate income or for asset revenues to attract inflow of foreign direct investment. Both theoretical and empirical studies have shown the sensibility of foreign direct investment decision with respect to tax rate differences between home countries and host countries. In general, more inflow of foreign direct investment can be expected if the tax rate of the home country is lower than that of foreign countries. This is the main reason for international tax cooperation. In this paper we propose a simple model to prove the sub-optimal Nash non cooperative solution in a two-country tax-competition game. The model shows that international tax cooperation can improve welfare of the participating countries. How to reach a cooperative solution for an international tax competition game (ITCG) is therefore an important issue for further discussions and studies. International institutions can play a crucial role to reach international tax cooperation or international tax harmonization.     

Intention to pay taxes or to avoid them: The impact of social value orientation

Economic factors such as audit rates and fines have shown inconsistent effects on tax payments, suggesting that they are not sufficient to explain tax compliance. Moreover, the tax compliance rate is surprisingly higher than what the standard economic model would predict. In the last fifteen years, literature aimed at solving this so called “puzzle of compliance” has increased and pointed out several factors that could possibly explain tax compliance processes, e.g., knowledge of the tax laws, trust toward the political system, as well as personal or social norms. The studies presented here examined the impact of social value orientation on tax morale and intention to avoid/evade taxes. Social value orientation was examined both as a chronic personal orientation (Studies 1 and 2) and as a contextual factor made salient by experimental manipulations (Study 3). The results are supportive of a relationship between social value orientation and measures of tax compliance. Furthermore, results of Study 3 provided evidence for a causal effect of social value orientation on intended tax non-compliance. The effect of social value orientation on intended tax non-compliance was mediated by tax morale (Studies 2 and 3). Results are discussed with reference to their potential practical applications.     

AN ANALYSIS OF THE LAFFER CURVE

The Laffer curve shows the relationship between tax revenue and the personal income tax rate, with tax revenue being a presumably concave function of the tax rate and equal to zero at tax rates of zero percent and 100 percent. If the personal income tax rate is reduced, then tax revenue will decrease (increase) if the economy is on the positively (negatively) sloped section of the Laffer curve. This paper derives a sufficient condition for the economy to be on the positively sloped section of the Laffer curve. In light of the current knowledge of the elasticities of supply of labor and supply of saving, it is difficult to escape the conclusion that a decrease in U.S. personal income tax rates will decrease tax revenue.     

TAX-RATE UNCERTAINTY, FACTOR SUPPLIES, AND WELFARE

Uncertainty about prospective changes in tax rates may increase factor supplies, and hence the tax base, permitting a reduction in tax rates that could result in a net increase in welfare. Under empirically relevant assumptions about attitudes towards risk we find that when an individual exclusively saves or works, the tax base rises in response to greater tax-rate uncertainty, so that welfare could indeed increase. However, when an individual both saves and works, the supply of the randomly taxed factor declines with increased uncertainty, implying that tax revenue and welfare decrease when the nonrandom tax rate is sufficiently low.     

浅谈中小企业税务风险化解及防范

中小企业税务风险通常指企业未能遵守国家税务法律法规而导致企业未来利益受损的可能性,企业应纳税而没有纳税,将来面临补税、罚款、加收滞纳金。中小企业的税务风险主要表现为:中小企业故意违反税法产生的税务风险;企业非故意违反税法产生的税务风险;税收政策调整或主管税务机关责任带来的税收风险;企业税收筹划带来的风险。中小企业防范和化解税务风险的举措表现为:牢固树立税务风险意识;提高涉税人员的业务素质;建立健全企业税收控制制度;营造良好的税企沟通机制。     

The possibilities for global inequality and poverty reduction using revenues from global carbon pricing

Global carbon pricing can yield revenues which are large enough to create significant global pro-poor redistributive opportunities. We analyze alternative multidecade growth trajectories from 2015 to 2105 for major global economies with carbon tax rates designed to stabilize emissions in the presence of both continued country growth and autonomous energy use efficiency improvement. In our central case analysis, revenues from globally internalizing carbon pricing rise to 8 % and then fall to 6 % of gross world product. High growth in India and China reduces global inequality and poverty strongly over time, but important incremental redistributive effects can be achieved using global carbon pricing revenues. Taking into account both between-country effects and previous literature estimates of within-country effects, a global carbon tax alone tends to be regressive in its global incidence. However, if its revenues are redistributed globally via equal per capita transfers, in our central case the Gini coefficient for world income falls by about 3 % and the share of the bottom decile rises by 81 % on average from 2015 to 2105. The population living in poverty falls by 16 % in 2015. Going further, global poverty could be eliminated entirely by 2015 according to our calculations if one third of global carbon tax revenues were redistributed directly to the poorest individuals.     

EXPECTED INFLATION AND INTEREST RATES

While there may have been a Darby-Feldstein effect in the 1960's (interest rates rising by more than expected inflation because of tax considerations), the relationship is so variable that it more likely reflects changing investor confidence in the expected returns to capital assets. In addition, the degree of capacity utilization appears to have a strong influence on short-term interest rates, and there is a statistically significant but quantitatively small liquidity effect from changes in the growth rate of money.     

A THEORY OF THE POLITICALLY OPTIMAL COMMODITY TAX

A theory of the politically optimal tax is developed where tax rates are endogenous and determined by forces in the political market. The theory is used to explain the levels of alcoholic beverage taxes between states in the United States. It is shown that these rates are influenced by the ownership structure existing in the liquor industry, the consumption externalities associated with drinking, the minimum drinking age laws, the earmarking of tax revenues, the enforcement of regulations and real income.     

Tax Reforms as Capital Market Development Factor

The article presents the preconditions of Armenian capital market development. A few hypotheses are proposed concerning correlation between direct taxes (in particular, profit tax and income tax) and financial sector development mediated with shadow economy. On the basis of studied theories and our empiric research (regression analysis of key indicators), our hypotheses were proven. So for the further development of Armenian capital market we consider it necessary to depart from profit tax, concurrently reducing income tax and social security tax rates.     

International Profit‐Shifting out of Developing Countries and the Role of Tax Havens

This article contributes to the debate on how tax avoidance and evasion can hamper development efforts by investigating the link between profit‐shifting out of developing countries and tax havens. Analysis of more than 1500 multinational corporations (MNCs) operating in India shows that in 2010 those MNCs with links to tax havens reported lower profits and paid less in taxes per unit of asset than MNCs with no such links. This confirms the notion that when corporations have links to tax havens they enjoy higher incentives, because of the low tax rates, and opportunities to shift income because of the secrecy provisions tax havens offer.     

CORPORATE TAX POLICY AND INDUSTRY LOCATION WITH FULLY ENDOGENOUS PRODUCTIVITY GROWTH

This paper considers how national corporate tax policy affects productivity growth through adjustments in geographic patterns of industry in a two‐country model of trade. With trade costs and imperfect knowledge spillovers between countries, production concentrates partially and innovation concentrates fully in the country with the lowest tax rate. A rise in the international corporate tax differential accelerates productivity growth through an increase in the production share of the low‐tax country that improves knowledge spillovers from industry to innovation. The paper also investigates the relationship between the corporate tax differential and the level of market entry, and analytically characterizes the effects of changes in tax policy on national welfare. (JEL F43, O30, O40, R12)     

TAXATION, AGGREGATE ACTIVITY and ECONOMIC GROWTH: FURTHER CROSS-COUNTRY EVIDENCE ON SOME SUPPLY-SIDE HYPOTHESES

This paper investigates the effect of marginal tax rates on the level of economic activity. Data from sixty-three countries for the period 1970-84 provide support for Koester and Kormendi's method of estimating marginal tax rates for individual countries. However, their conclusion that increases in marginal tax rates have negative effects on the level of economic activity is not robust when we extend the time period from 1970-79 to 1970-84. Further, even for Koester and Kormendi's own data set, the negative relation does not hold when the sample is disaggregated into industrial countries and low-income countries.     

INTERNATIONAL TAX COMPETITION AND THE DEFICIT BIAS

I analyze the dynamic effects of tax competition on public budget deficits. I find that stronger tax competition leads to a fiscal deficit bias at the early stages of financial liberalization. When countries differ in terms of capital mobility, further liberalization leads to external imbalances and diverging fiscal deficits while corporate tax rates converge. Consistent with theory, I find that stronger tax competition increases deficits in a sample of OECD countries, controlling for tax revenues and other standard determinants of fiscal deficits. (JEL E62, F62)     

Decision heuristics and tax perception – An analysis of a tax-cut-cum-base-broadening policy

In this paper, both a conjoint analysis and a lab experiment are conducted to analyze the influence of changes in the tax rate and the tax base on the perceived tax burden. Our results show that the majority of individuals do not make rational tax decisions based on the actual tax burden but rather use simple decision heuristics. This leads to an irrationally high impact of changes in nominal tax rates on the perceived tax burden. Taxpayers favor tax options that apply a lower tax rate on their gross income over a higher tax rate applied on their net income despite the lower actual tax burden of the latter option. This result suggests that politicians could combine increasing fiscal revenues and decreasing subjects’ tax perception. Furthermore, overestimation of tax rate changes increases considerably when information on tax rate is considered first (framing effect).