Absence Of Taxes Research Articles

Saudi Arabia: Strengthening the Power Vertical in the Context of the Collapse of the Old World-System

The implementation of reforms in Saudi Arabia met with both support and resistance. A significant part of the youth, pro-government “liberals”, and those elites that rejected the former feudal pyramid system stood in favor of the reforms. Among the opponents were jihadist extremists, some of the members of the “dominant tribe” of the House of Saud, who were losing their power and income associated with the previous system of corruption, some part of the Wahhabi corporation, religious police, theologians, some part of the business that flourished due to state subsidies and the absence of taxes and control over expenditures and incomes. Among the opponents were also conservatives from the middle and lower strata, dissatisfied with the granting of greater rights to women. The regime’s international image was spoiled by the assassination of opposition leader Jamal Khashoggi in the Saudi consulate in Istanbul. However, the firm course of the kingdom aimed at protecting, above all, the national interests of the country and the refusal to obey the dictates of the United States in matters of oil prices was highlighted by a demonstrative rapprochement with China and neutrality in the confrontation between Russia and the collective West. Saudi Arabia looked for and found its place in the changing world-system.

ПРАВОВЕ РЕГУЛЮВАННЯ ОПОДАТКУВАННЯ СІЛЬСЬКОГОСПОДАРСЬКОЇ ДІЯЛЬНОСТІ В КРАЇНАХ ЄС

An analysis of the legal regulation of agricultural taxation in the EU member sates on the example of Poland, Czech Republic and Austria was made. A number of tax benefits for agricultural producers, which are contained in the legislation of the above countries, have been identified: reduction of income tax on farms; real estate tax benefits; discounts on tax on fuel; absence of taxes on property inherited or agricultural land and buildings, the ownership of which is acquired on the basis of a gift agreement; reduction of contributions under a special social insurance scheme. The urgency of the issue of providing tax benefits for agricultural producers in Ukraine, introduction of a special tax regime, which would contribute to the formation of a balanced structure of agro-industrial production was highlighted. It was noted that implementation of the experience of EU member states in the field of taxation of agricultural activities in domestic agricultural sector of the economy is extremely important and requires changes to legislation. Tax burden affects the profits of agricultural producers and is one of the key factors influencing the development of the agricultural sector in the country, the competitiveness of small and medium-sized socially oriented agricultural businesses, and reflects the priorities of agricultural activities. Therefore, the legal regulation of agricultural production is one of the key issues on the agenda. Ukraine needs to reform the system of taxation of agricultural production in order to form a balanced structure of agro-industrial production on the model of European countries.

Cost of capital and valuation in the public and private sectors: Tax, risk and debt capacity

AbstractCost of capital and valuation differ in the private and public sectors, because taxes are a cost to the private sector but are only a transfer to the public sector. We show how to transform the after‐tax private sector cost of capital into its pre‐tax equivalent, for comparison with the public sector cost of capital. We establish the existence of a tax induced wedge between these two costs of capital. The wedge introduces a preference on the part of the private sector for assets with rapid tax depreciation, high debt capacity and low risk. We show that, in circumstances where an asset has identical public and private sector valuation in the absence of taxes, the tax induced difference in valuation is identical to the change in government tax receipts that results from having the asset owned by the private rather than the public sector. We provide some examples of distortions that result from failure to adjust for changes in tax revenues, and show how to effect such adjustment.

A New Approach to Measurement of Errors from Trade Discrepancies: The Duty-free Zero Incentive Approach (DFZI)

The Duty-Free Zero Incentive Approach (DFZI) for measuring errors in trade discrepancies draws from the assumption that in the absence of taxes, there should be no incentive to evade taxes. Assuming there were zero taxes on goods, that is, duty-free, then there would be zero-incentive to evade (hence the term “duty-free zero incentive”) such that any discrepancy in trade data would solely be on account of errors in measurement only. This approach is useful for ascribing the errors arising from missing imports and is very useful in the estimation of smuggling.

Joacim Hansson. Educating Librarians in the Contemporary University: An Essay on iSchools and Emancipatory Resilience in Library and Information Science. Sacramento, CA: Library Juice Press, 2019. 208p. Paper, $22.00 (ISBN 978-1-63400-058-1). LC 2019006528.

We can cut straight to the chase at the outset. Every academic library (and most public libraries) should acquire this book. An important note is necessary; the subtitle of the book is more telling of the content than is the main title. This phenomenon actually reflects the expansive treatment that Hansson offers in his critical assessment both of librarianship and of Library and Information Science (LIS) today. Hansson begins his examination by quoting from the piece by Panos Mourdoukoutas, “Amazon Should Replace Local Libraries to Save Taxpayers Money,” which was published in 2018 in Forbes but was almost immediately removed from the magazine’s website due to the intense controversy of the remarks. Fortunately, the article is preserved at www.ala.org/yalsa/sites/ala.org.yalsa/files/content/AmazonShouldReplaceLocalLibrariestoSaveMoney.pdf . The argument was that Amazon provides something better, without tax fees. As Hansson aptly notes, the absence of taxes is replaced by product charges that a large portion of the population cannot pay.

How Do Entrepreneurial Portfolios Respond to Income Taxation?

We investigate how personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. In a reformulation of the standard portfolio choice model that allows for underreporting of private business income to tax authorities, we show that a fall in the tax rate may increase investment in risky entrepreneurial business equity at the intensive margin, but decrease entrepreneurial investment at the extensive margin. To test these hypotheses, we use household survey panel data for Germany eliciting the personal wealth composition in detail in 2002, 2007, and 2012. We analyze the effects of personal income taxes on the portfolio shares of six asset classes of private households, including private business equity. In a system of simultaneous demand equations in first differences, we identify the tax effects by an instrumental variables approach exploiting tax reforms during our observation period. To account for selection into entrepreneurship, we use changes in entry regulation into skilled trades. Estimation results are consistent with the predictions of our theoretical model. An important policy insight is that lower taxes drive out businesses that are viable only due to tax avoidance or evasion, but increase investment in private businesses that are also worthwhile in the absence of taxes.

How Do Entrepreneurial Portfolios Respond to Taxation?

We investigate how personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. In a reformulation of the standard portfolio choice model that allows for underreporting of private business income to tax authorities, we show that a fall in the tax rate may increase investment in risky entrepreneurial business equity at the intensive margin, but decrease entrepreneurial investment at the extensive margin. To test these hypotheses, we use household survey panel data for Germany eliciting the personal wealth composition in detail in 2002, 2007, and 2012. We analyze the effects of personal income taxes on the portfolio shares of six asset classes of private households, including private business equity. In a system of simultaneous demand equations in first differences, we identify the tax effects by an instrumental variables approach exploiting tax reforms during our observation period. To account for selection into entrepreneurship, we use changes in entry regulation into skilled trades. Estimation results are consistent with the predictions of our theoretical model. An important policy insight is that lower taxes drive out businesses that are viable only due to tax avoidance or evasion, but increase investment in private businesses that are also worthwhile in the absence of taxes.

Do Payroll Taxes in the United States Create Bunching at Kink Points?

Much of the literature on labor supply responsiveness to taxes studies the effects of payroll and income taxes together, usually using income tax changes to identify effects. There is less research on how individuals respond to payroll taxes specifically. Given the salience of the payroll tax relative to other income taxes, it is possible that taxpayers respond differentially than income tax elasticities may suggest. Using data from the Social Security Administration, I exploit two recent short-term changes in payroll taxes to study whether labor earnings responded. The Making Work Pay Tax Credit reduced the payroll tax by 6.2 percentage points up to $6,451 ($12,903 for couples) of earnings in 2009 and 2010. I test for bunching at this kink. In 2011, payroll taxes were reduced by 2 percentage points, changing the incentives to bunch at the taxable earnings maximum. While many papers on bunching must make assumptions on the distribution of earnings in the absence of taxes, an advantage of studying changes in payroll taxes is that it is possible to observe the distribution in different years under different tax regimes. I find evidence of bunching induced by the payroll tax changes. I estimate a tax elasticity of labor earnings of 0.08 at the taxable earnings maximum, suggests that policy proposals to raise or eliminate the payroll tax cap should consider labor supply behavioral responses to this policy. I also estimate larger responsiveness to the Making Work Pay Tax Credit.

The disposition effect in the absence of taxes

I measure household investment decisions undertaken in a setting that is free from investment taxes. The disposition effect is unequivocally present, but any seasonal impact of tax-loss selling is absent. There is evidence that the disposition effect correlates positively with inferior risk-adjusted investment performance. Although household preferences are unknown, losses cannot be explained by tax benefits.

Price adjustment method and ex-dividend day returns in a different institutional setting

This study investigates the determinants of the ex-dividend day price behavior in the Athens Stock Exchange (ASE), a unique institutional setting, and examines how a major regulatory change in the price adjustment method affects the extent of the ex-day stock price drop. We find that allowing the market to freely adjust prices, after 2001, the ex-dividend day price improves the pricing efficiency of the market in the sense that the raw price ratio tends to one and abnormal returns tend to zero. We also find that in the absence of taxes on dividends and capital gains and certain microstructure impediments discussed in the literature – i.e., bid-ask spread, market makers, price discreteness, tick size and limit order adjustment mechanism – stock illiquidity is the best candidate for explaining the magnitude of the ex-dividend day price adjustment.

Using Taxes to Deter Illegal Fishing in ITQ Systems

We study the effects of different tax schemes used in fisheries management in combination with an individual transferable quota system. We focus on the effects of taxes on equilibrium quota prices and on violations under the assumption that enforcement to induce compliance is imperfect and costly. The use of taxes is motivated by the regulator’s need to recover costs for enforcement activities. We propose the use of a tax on the price of the processed products based on its impact on violations and the information that is required to implement it. We also show that this tax has a double pay-off for enforcement because it reduces the demand for illegal fishing and increases revenue for enforcement activities without producing a deadweight loss in the quota market. We present an application of our model to the case of the red shrimp fishery in Chile. In our simulation example, a tax of 7 % on the price of fish exports could sufficiently reduce harvest demand and generate enough funding to completely eliminate quota violations, which, in the absence of taxes, can be more than 100 % of the total allowable catch. At the same time, this tax could increase the equilibrium quota price by 19 %.

The Disposition Effect in the Absence of Taxes

I measure household investment decisions undertaken in a setting that is free from investment taxes. The disposition effect is unequivocally present, but any seasonal impact of tax-loss selling is absent. There is evidence that the disposition effect correlates positively with inferior risk-adjusted investment performance. Although household preferences are unknown, losses cannot be explained by tax benefits.

Regional centrality and tax competition for FDI

We examine a trade model where three countries compete for an exogenous number of firms. In our hub-and-spoke framework, one country is the hub through which all trade with and between spokes takes place. We establish the distribution of industrial activity in the absence of taxes and compare it to the equilibrium when countries compete to attract firms. Even when all countries have the same size, the centrality of the hub sets it apart. We determine how this trading pattern matters, comparing it to a structure with direct trade between all countries. The implications of international tax competition are also examined.

Reviews Theories of Profit Dividing in Accounting

So far, researchers have provided many models and theories for describe, explain and predict effective factors on company decisions regarding profit dividing. In terms of perfect market profit dividing hasn't impact on firm value and therefore in decision making is a irrelevant factor. These has been on condition make several assumptions include the following : 1. Absence of taxes 2. Absence of transaction costs (Including the cost of issuance of stock and debt) 3. Lack the impact of financial leverage (Debt Ratio) on cost of capital 4. Information symmetry between owners and managers in relation to future expected conditions

Why Do Stock Prices Drop by Less than the Amount of the Dividend? Evidence from a Unique Environment

We investigate the effect of a lack of an automated limit order adjustment mechanism on ex-dividend day stock price behavior in a unique environment in which there are no taxes on dividends and capital gains. The absence of taxes in Oman allows us to test the effect of the lack of a limit order adjustment mechanism in the absence of confounding tax effects that are present in other markets. We find that overnight drop in the ask price is smaller than the overnight drop in the bid price. In addition, we find that average price drops are smaller than the dividend amount for all dividend sizes. We also find no evidence of a sawtooth-shaped relationship between the dividend amount and the ex-dividend day price drop. These results are generally consistent with a lack of an automated limit order adjustment mechanism.

A Note on Corporate Capital Structure Theories

Financial theory revolves around rational participants who want to maximize their utility or wealth for a given level of risk. This maximization, in the first place, calls for the optimality of available resources, making capital financing decisions critical for corporations. Any discussion on optimal capital structure leads back to Modigliani and Miller’s classical capital structure irrelevance hypothesis (1958), according to which, in an efficient market, the value of the firm is unaffected by its choice of capital structure in the absence of taxes, bankruptcy costs, and asymmetric information. This irrelevance makes the firm’s managers indifferent to opting for debt or equity in the firm’s capital structure.

FDI, Trade Costs and Regional Asymmetries

We set up a trade model where three countries compete for an exogenous number of firms. Our innovation lies in the geography of the model. Of the three countries, one is the hub through which all trade takes place. First, we establish the natural geography of the region, which is given by the equilibrium distribution of industrial activity in the absence of taxes or subsidies. We then examine the implications for corporate taxes when the countries compete with each other to attract firms. We find that, even when all countries are the same size, the centrality of the hub gives it an advantage in tax setting, such that its equilibrium tax can be larger than that of the spokes and yet it still attracts a disproportionate share of industry. Thus geographic advantage in tax competition has a second dimension, centrality in addition to size.

Firm-specific factors as determinants of capital structure in the absence of taxes

Extreme Bounds Analysis (EBA) is used to identify the determinants of capital structure in a tax-free environment, using data on Kuwaiti shareholding companies. The results which are more supportive of the pecking order theory than the trade-off theory, show some evidence for the importance of growth opportunities and profitability. Judged by robustness, the number of determining variables is smaller than what is typically found in the literature.

Tax-induced multiple equilibria

In this article, we present examples of tax-distorted general equilibrium economies in which equilibria are unique in the absence of taxes, but taxes generate multiplicity when introduced over a range of tax rates. We also provide converse examples of economies with multiple no-tax equilibria, but where taxes when introduced induce uniqueness. Both Foster and Sonnenschein (1970) and Kehoe (1985) discussed the possibility of tax-induced multiplicity. Here, we show how in 2-individual 2-good pure exchange economies with Constant Elasticity of Substitution/Linear Expenditure System (CES/LES) preferences such cases can occur. We also provide ranges of consumption tax rates over which these cases can occur for alternative parameterizations.

Fifty Years Since Modigliani and Miller: Is Capital Structure Really Relevant for Firm Value?

More than fifty years ago, Modigliani and Miller proposed that, in the absence of taxes, capital structure is irrelevant in the sense that it does not affect firm value. Since then, three sets of theories (signaling, agency, and tradeoff models) have reasserted the relevance of capital structure. In this paper, I show that capital structure does not affect firm value in any of these theories under a set of assumptions not precluded by these theories. I reach three main conclusions. First, signaling through capital structure only conveys a priori unknown information about firm value – it does not affect it. Second, an important reason why existing agency‐cost theories and tradeoff theories proved capital structure irrelevance is that they started with an inefficient allocation of project‐choice control, i.e., inefficient governance; if project‐choice control can be efficiently allocated (and I show it can under a general set of assumptions), then capital structure is irrelevant. Third, I also show that, despite the value irrelevance of capital structure, it is possible to explain observed patterns in the data, such as the higher use of leverage by firms with more tangible assets.