Average Income Tax Research Articles

New Empirical Evidence on Factors Influencing the Yield on High-Grade Municipal Bonds

We investigate the impact of federal budget deficits and other factors on the ex-post and ex-ante real yields on high-grade municipal bonds. The estimation results reveal that both yields increase with the real yield on 30-year Moody’s Aaa-rated bonds and provisions in the Community Reinvestment Act but decrease with net capital inflows, the real GDP growth rate, and the average effective federal income tax rate. Most importantly, both yields are increasing functions of the federal budget deficit. These results support limiting the size of federal budget deficits to avoid the excessive crowding out of private investment spending.

An alternative measure of profit shifting and corporate income tax losses

The aim of this paper is to assess an alternative method of estimating the amount of profit shifting and corporate income tax revenue losses. We propose a nonstandard methodology to refine the measurement of profit shifting beyond the traditional semi-elasticity procedure. A four-stage Data Envelopment Analysis (DEA) is used to estimate the relative technical efficiency of profits before taxation reported by foreign-owned companies in Czechia. The efficiency gap resulting from the difference between the first-stage and third-stage technical efficiency scores represents the level of profit shifting. Using the statutory and average effective corporate income tax rates, we calculate the amount of corporate income tax revenue losses attributable to profit shifting. The estimated mean level of profit shifting by foreign subsidiaries involved in the manufacturing and service sectors between 2009 and 2016 is over 570 million EUR, and the mean amount of tax losses exceeds 100 million EUR. In relative terms, profit shifting leads to a decrease in total corporate income tax revenues of 2% in Czechia. Foreign-owned companies involved in the manufacturing sector are less efficient than foreign-owned companies from services industries in terms of relative technical efficiency scores, while companies involved in the service sector have a considerably high efficiency gap with respect to companies involved in the manufacturing sector.

What is the average federal individual income tax rate on the wealthiest Americans?

Abstract I estimate the average federal individual income tax rate paid by America’s 400 wealthiest families, using a relatively comprehensive estimate of their Haig–Simons income: their change in wealth, plus US individual taxes. I do so using publicly available statistics from the IRS Statistics of Income Division, the Survey of Consumer Finances, and Forbes magazine from 1992 to 2020. This paper’s baseline analysis uses all years of data and systematically varies start and end years. The baseline estimates of the average federal individual income tax rate on the wealthiest 400 families are 9.6 per cent in nominal terms and 12.0 per cent in real (inflation-adjusted) terms. Sensitivity analyses yield nominal estimates in the 6.7–14.6 per cent range and real estimates in the 8.4–17.9 per cent range. These estimates can be combined with effective corporate income tax rates to estimate all-in effective income tax rates on the wealthiest.

The Economic Value of New Sustainable Products: The Case of Photovoltaic Thermal (PVT) Hybrid Solar Collectors

Among green energy technologies, solar power is a promising technology in the net-zero era of the power industry. Conventional solar modules have decreasing efficiency weaknesses as the temperature rises, whereas photovoltaic thermal (PVT) systems do not remove heat from the module or lower the temperature. However, the profitability of PVT systems has been underestimated. The profitability of new convergence products, such as PVT technology, entering the market for the first time allows for the evaluation of the appropriate starting price and policy requirements to support the product’s market entrance. We used the contingent valuation method (CVM) to solve this problem. The survey derived the respondents’ mean willingness to pay (WTP) and the total amount of social benefits. Among these CVM models, the one-and-one-half-bound (OOHB) spike model was used to distinguish zero WTP. Based on a survey of 300 households, respondents were willing to pay an additional yearly average income tax of KRW 10,608 (USD 7.90), and the total social benefit of PVT technology was calculated to be KRW 145 billion (USD 108 million). This result shows that individuals evaluate the value of PVT as 3.69% of their monthly electricity bill and 2.8% of their monthly gas bill. Several additional factors that influence WTP were analyzed, indicating a high possibility of PVT adoption by individuals who have replaced or are planning to replace photovoltaic (PV) modules. This study is significant because it examines the economic value of PVT and proposes a focus group for the effective market entry of new carbon neutrality products.

Do Tax Increases Tame Inflation?

The answer is “yes” for personal income taxes but “no” for corporate income taxes. Using narrative-identified US federal tax changes post-World War II and disaggregated sectoral data on consumer and producer prices, we show that higher average personal income tax rates lower prices across a broad range of sectors, but higher average corporate tax rates do not. There is also significant sectoral heterogeneity in the size of the effects. Finally, only personal tax increases lower inflation expectations, while corporate tax increases lead to persistent declines in stock prices. Our results are consistent with personal taxes affecting aggregate demand and corporate taxes persistently affecting supply conditions.

Exploring a quantitative assessment approach for car dependence: A case study in Munich

While discussions are ongoing about the exact meaning of car dependence, its assessment has been primarily qualitative. The few quantitative approaches adopted so far have tended to analyze either high car use and ownership or a lack of public transport accessibility as indicators of car dependence. This study aims to quantitatively evaluate car dependence in Munich after merging these three aspects—car use, ownership, and lack of public transportation—and identify its associated potential spatial predictors. The exploratory approach is applied to traffic zones in the transit service area around Munich, Germany, which includes calculating an indicator for car dependence and its linkage with socio-spatial factors using multiple linear regression. For this purpose, traffic data from 2017 and census data from 2011 are used, which are the most recent available. It was found that car dependence is higher in suburban areas with low local numbers of employees, low land costs, and high average income tax payments. Identifying areas with higher car dependence and associated factors can help decision makers focus on or prioritize these areas in providing better access to alternative transportation and basic opportunities. Future research could focus on application in additional regions, using recent and aligned data, and further combinations with qualitative research.

Manifestations and Perception of Economic Inequality of Citizens in Russia and the Impact of Personal Income Tax Deductions on it: Analysis of the Results of a Sociological Survey

The subject of the study is the manifestations and perception of economic inequality of citizens in Russia. Economic inequality is one of the global problems of our time. In Russia, it has been at a consistently high level for 30 years. The task of smoothing the inequality of citizens in Russia has been set at the highest state level. Research interest in this regard is the manifestations and subjective assessment or perception by citizens of the degree of inequality, regardless of its calculated statistical indicators, as well as the ability of the state to smooth inequality and overcome poverty. The purpose of the study is to identify and evaluate the manifestations of economic inequality of citizens in Russia, as well as its perception based on the results of a sociological survey to determine the prospects for smoothing inequality. The scientific novelty consists in identifying the manifestations and assessing the perception of economic inequality by Russian citizens based on the interpretation of the results of a sociological survey, as well as in substantiating the aggravating effect of personal income tax deductions on inequality. With the acute perception of inequality and injustice in the distribution of income in Russia, there is no intensification of protest sentiments and the risks of threats to socio-economic stability are not realized. Manifestations of inequality of citizens are the need to save on food and consumer preferences, tourist activity, the availability of credit obligations, the use of medical and educational services, the demand for personal income tax deductions. The current bias in favor of investment and property deductions for personal income tax to the detriment of social and standard deductions does not allow realizing the potential of their smoothing effect on the inequality of citizens. Property and investment deductions used by more affluent citizens lower the average effective personal income tax rate for them at a level lower than that of poor citizens, which leads to regressive income taxation.

Technological progress and optimal income taxation

Facing technological progress, how should a government reform income taxation? To address this question, optimal capital and labor income taxation is obtained for an economy of heterogeneous individuals. Technological progress raises optimal capital income tax rate and lowers optimal average marginal labor income tax rate if it is capital-biased by increasing relative capital productivity. Technological progress does the opposite if it is labor-biased by decreasing relative capital productivity. Neither capital-biased nor labor-biased technological progress affects optimal slope of labor income tax rate schedule. Technological progress does not affect optimal income taxation if it is unbiased by preserving relative capital productivity.

Average marginal tax rates in the U.S., 1913–2019

Measuring marginal tax rates at the economy-wide level, while useful for empirical work in economics and beyond, is a non-trivial exercise. This paper revises and updates through 2019 the average marginal income and Social Security tax rates originally conceived by Barro and Sahasakul (1983, 1986) and Seater (1982, 1985) and subsequently updated by Stephenson (1998). The update extends previous estimates of the marginal tax rate series over two decades—thus providing more than a century of data going back to 1913. This update also revises the estimates reported in previous studies to provide historically consistent series following more recent comprehensive revisions of the National Income and Product Accounts. The newly updated series reflect tax legislation over the last two decades. Generally, tax cuts in the early 2000s along with the Great Recession led to a decrease in overall average marginal tax rates from levels achieved in the late 1990s. The Trump tax overhaul in 2017 lowered average marginal tax rates by about one percentage point. • Data on average marginal tax rates for the U.S. individual income tax, 1913–2019. • Data on average marginal tax rates for the Social Security tax, 1937–2019. • Average marginal comprehensive (income plus Social Security) tax rates.

Untangling the gender pay gap in radiation oncology.

Untangling the gender pay gap in radiation oncology.

Welcome in my back yard? Explaining cross-municipal opposition to refugees through outgroup size, outgroup proximity, and economic conditions

AbstractThis study explores contextual sources of attitudes towards refugees by investigating the impact of outgroup size, outgroup proximity (or the presence of an asylum seekers centre), economic conditions, and their interaction on individuals’ attitudes. We analyse data from a cross-sectional survey of the Belgian adult population in October 2017, enriched with municipality-level indicators of intergroup context and economic conditions. Drawing on multilevel regression analyses, our findings show that proximity to an asylum seekers centre and a higher average taxable income of residents are associated with positive individual attitudes towards refugees, while (changes in) outgroup size are not linked with attitudes among this sample. Additionally, our findings indicate that the positive impact of educational attainment on attitudes is amplified (weakened) in municipalities with a larger (smaller) refugee and asylum seeker group size. In summary, these results highlight the relevance of including outgroup proximity at the local level and interactive relations in contextual studies of outgroup attitudes.

Panel Data Analysis on Income Tax Progressivity and Gini Coefficient

The research explores personal income tax progressivity as a mechanism to reduce income inequality. In the personal income tax progressivity model with data from 1988-2005, the unbalanced panel has up to 103 countries with 1,528 observations. The unbalanced panel uses Driscoll and Kraay standard errors to adjust for nonparametric heteroscedasticity autocorrelation. The researchers test the top, marginal, and average personal income tax rate progressivity. In the full panel, the top, marginal and average rate of personal income tax progressivity are all statistically significant. The models also explore differences in results based on income level. Key findings include the average rate of personal income tax progressivity is statistically significant in the more panels than the marginal rate of income tax progressivity or the top marginal rate. Both the net and market Gini coefficients tend to have similar statistical significance results which may suggest equality promoting policies may cause structural changes in the economy that lead to higher pre-tax incomes for lower-income individuals.

Prosečna efektivnost poreza na dobit na primeru kompanija na listingu Beogradske berze

The fiscal policy of a country is a crucial source of successful and normal functioning of that country's economy. The implications of fiscal policy can be reflected in both the private and the functioning of the public sector of a country's economy. Public finance is an area of economics dealing with the analysis of tax policy and government spending policy. One of the important areas of public finance research is corporate income tax. Corporate income tax is a direct tax imposed at the national level for the purpose of taxing the profits of certain companies, whether state-owned or privately owned. The aim of this paper is to look at the actual amount of profit tax paid, i.e. by observing the profit before taxation of companies listed on the Belgrade Stock Exchange. The paper considers the effective tax rate of companies and points out the deviation of the same from the legally prescribed corporate income tax rate in the Republic of Serbia and the implications of corporate income tax on the company's business results. The paper presents graphical and tabular representations of the effective tax rates of each company as well as the average effective tax rate of companies listed on the Belgrade Stock Exchange in relation to the law in the period from 2013 to 2020 in the Republic of Serbia. Finally, a statistical analysis of the presented results is given in order to understand more precisely the deviation of the effectiveness of corporate income tax of companies listed on the Belgrade Stock Exchange as well as the analysis of the correlation between the growth of the average pre-tax profit and the growth of the average effective corporate income tax rate.

Labor Market Integration and Fiscal Competition

AbstractThis paper studies the long‐run impact of international labor mobility on a union of countries with an integrated labor market. We build a multicountry model populated by overlapping generations of households with endogenous cross‐country migration flows. Independent governments use fiscal measures to compete for labor. The model is calibrated to match the empirical economic and migration patterns in the European Union. We find that the fiscal‐competition motive has a quantitatively significant impact on optimal fiscal policy, decreasing the average debt‐to‐GDP ratio by 12 percentage points (p.p.) and the average labor income tax by 1 p.p. relative to the no‐competition scenario.

Income tax on PGBL and VGBL pension plans: Analysis of progressive and regressive forms of taxation

Purpose – The study investigates incentives in two types of private pension plans in Brazil: PGBL and VGBL. It identifies which one to choose to minimize income tax, considering both progressive and regressive forms of taxation. Theoretical framework – Based on Sutcliffe (2016), the individual decision-making process depends on the taxonomy of tax incentives (Disney & Whitehouse, 1999) and economic effects (Barr & Diamond, 2009; Armstrong, Davis, & Ebell, 2015). Design/methodology/approach – This study used an innovative approach, calculating the actuarial present value gross and net of tax for nominal cash flows, applied to the objective function that minimizes the average effective income tax rate – according to the definition by Fullerton (1984). A simulator was created for the optimal decision of representative individuals regarding the form of taxation to choose, thus reducing the amount of tax payable. Research Practical & Social implications – We advise those with PGBL and VGBL pension plans on the best decision regarding forms of taxation, thus contributing to an improvement in tax legislation. Originality/value – The study’s main contribution lies in calculating actuarial annuity gross and net of income tax, impacted by inflation over time, in addition to calculating traditional variables such as real interest rate, taxable income, deductible expenses, age, sex, and the life table. Keywords – private pension plans, PGBL, VGBL, tax relief, income tax.

Geographical variations of socioeconomic status and prostate cancer mortality in Taiwan

A population-wide study was conducted to determine the association between area-level socioeconomic status and prostate cancer mortality in Taiwan. Age-period-cohort analysis was performed to adjust the time-trend variation. The area-level socioeconomic factors included proportion with a higher education, average income tax, population density, and clinical workload. After adjustment for time-trend variations in age, period, and cohort, prostate cancer mortality was significantly lower in the groups with the highest higher education proportion (rate ratio 0.88; 95% Confidence Intervals 0.83-0.93), average income tax (RR 0.90; 95% CIs 0.86-0.94), and population density (RR 0.88; 95% CI 0.83-0.93). When all variables were incorporated into one model, the rate ratio of prostate cancer mortality was 0.92 (95% CIs 0.88-0.97) in the region with the highest average income tax level compared with that with the lowest level, but differences in the other socioeconomic factors were not significant. This study revealed a significantly lower prostate cancer mortality rate in areas with a high higher education proportion, average income tax level, and population density compared with areas of low socioeconomic status in Taiwan.

Do taxes affect number of foreign enterprises controlled abroad by Slovak companies in the age of globalization?

Research background: Globalization has so far brought the possibility of international trade as well as the possibility of establishing companies abroad. Countries see a number of benefits in attracting foreign enterprises. However, the question arises about how countries may affect the number of enterprises established by domestic companies abroad? Purpose of the article: The aim of this article is to find out whether corporate income tax rates have an impact on establishment of foreign controlled companies by Slovak companies abroad. Secondly, the aim of the work is to uncover whether trading across borders (which represents globalization), may influence the decision-making of such companies. To verify this, two groups of countries were created: one with a lower and the other with a higher average corporate income tax rates compared to the average rates in the Slovakia. The hypothesis is that paying taxes plays negative role in the number of foreign controlled enterprises by Slovak companies. Methods: To estimate the hypothesis, the panel regression analysis is applied. Findings & Value added: The results of the work may help in policy making decisions aimed at monitoring of foreign controlled companies from the Slovak republic. The findings reveal that taxes might not be the best, and at the same time the results reveal different area that may affect the establishment of such companies – namely trading across borders.

A Further Inquiry into Factors that Influence Federal Personal Income Tax Evasion in the U.S.

ABSTRACT This study identifies factors that may have influenced the degree of aggregate federal personal income tax evasion in the U.S. An established tax evasion model is updated to include the most recent data available and augmented with the addition of heretofore neglected or overlooked explanatory variables. To measure the degree of aggregate tax evasion behaviour, we adopt the percentage of personal taxable income that was unreported to the IRS by using official time series data for the years 1980 through 2016. We incorporate previously resilient variables such as the federal tax rate, the unemployment rate, the audit rate of filed returns by IRS personnel, the penalty interest rate on detected tax evasion, and a measure of real income growth into our study. Each has a statistically significant impact on the degree of aggregate federal personal income tax evasion, consistent with prior literature. As an extension of the literature, we find compelling evidence that age, gender, the average effective state income tax rate, and the percentages of federal personal income tax returns that include Schedule C and/or Schedule A are additional variables that have been largely ignored in previous related studies but appear to have impacted tax evasion behaviour.

Spread between the Moody’s Aaa-Rated Corporate Bond Yield and the Yield on Municipals: Co-integration Analysis

While the research linking interest rates to government deficits is extensive, the impact of other tax-related variables is uncommon. This study seeks to add to the literature on credit markets by exploring the impact of not only the budget deficit but also average effective personal income tax rates and personal income tax evasion as explanatory variables. To the best of our knowledge this study is the first study to recognize the joint importance of all of these fiscal variables. We utilize data covering the post-Bretton Woods period from 1971 through 2016 to analyze the impact of the three variables in order to shed light on the spread between the real interest rate yields on Moody’s Aaa-rated corporate bonds and high quality municipal bonds. Estimations reveal that the higher the average effective federal personal income tax rate, the greater the differential between the yields on corporate bonds and tax-free Municipals. Furthermore, it is found that the higher the adjusted gross income gap, the greater the real yield spread between Moody’s Aaa-rated corporate bonds and high quality municipal bonds. Finally, the greater the primary budget deficit, the greater the spread as well.

Taxation, Entrepreneurship, and Incorporation Status of Self-Employment

This paper splits self-employment, which has mostly been used as a proxy for entrepreneurship, into two different entrepreneur types with incorporated and unincorporated businesses. This split sheds light on examining how these two types differ in sensitivity to individual-specific marginal and average income tax rate changes in the US. Thus, I analyze the probability of becoming an incorporated or unincorporated self-employed worker by utilizing logit and IV models. I use the Annual Social and Economic (ASEC) rotating panel data of the Current Population Survey (CPS) from 2005 to 2019 to track a paid employee's decision to become a self-employed worker. My empirical findings show that marginal and average personal income tax rates positively affect the decision to become a self-employed worker with an incorporated business. However, I do not find a statistically significant relationship between the tax rates and entry into unincorporated self-employment. My results are robust to alternative specifications. The positive association between the tax rates and entry into incorporated self-employment might be due to increased opportunities for tax sheltering and income shifting. This might lead to unequal taxation, and the choice of legal form might be distorted by tax considerations.