Changes In Tax Regimes Research Articles

Estate Taxes And Charitable Bequests: Evidence From Two Tax Regimes

Much of the literature on the effects of estate taxation on charitable bequests has relied on cross sectional data, reflecting the uniqueness of death. Few have explored longitudinal data to exploit exogenous variations in tax regimes. The latter, however, continue to be susceptible to omitted variable as well as measurement error biases attributable to changes in the treatment of spousal bequests and frequent changes in tax regimes. This paper explores the effects of the estate tax on charitable bequests using administrative data from two tax regimes where earlier biases are minimized. The deductibility of charitable bequests is found to have significant implications for giving. However, the effects of estate tax repeal are much smaller. These findings are sensitive to expectations of the tax regime in effect at time of death.

Betting the Future Online

Abstract The Internet has brought, among other things, the online betting exchange. From desks in the City or from laptops on sunny beaches, those in the know or out of it can place bets with each other on anything under the sun, whether likely—Australia beating England at cricket—or the reverse. If you have a hunch that a genetically engineered Tyrannosaur will wander down Oxford Street next year, and if you want to put money on it, Internet betting exchanges will find someone to accommodate you. Leighton Vaughan Williams explains how a simple change in tax regime has brought something other than just a more efficient gambling system. It has created a strangely accurate way of foretelling the future.

Marginal Stockholder Tax Effects and Ex-dividend Day Behavior - Thirty-two Years Later

Since Elton and Gruber's (E&G) original article on taxes and ex-dividend price behavior was published in 1970, over 100 articles have appeared in the leading journals of financial economics examining whether prices fall by less than the dividends and, if so, whether or not the phenomenon is due to tax effects, market microstructure effects, or some other effect. The microstructure argument is the most serious alternative to the tax argument. All of the microstructure arguments state that the fall in stock price should be less than the dividend, regardless of whether the dividend is taxable or tax-advantaged. By testing ex-dividend effects on a sample of closed-end funds where dividends are taxadvantaged, we find that taxes should and do cause the fund price to fall by more than the amount of the dividend. This is consistent with a tax argument and inconsistent with a microstructure argument. Examining the sample of tax-free dividends, we find that the E&G and return measures change across two tax regimes exactly as theory suggests they should if taxes mattered. We then examine non-tax-advantaged closed-end funds. For these funds we should find the traditional ex-dividend tax effects: the fall in price on the ex-dividend date should be less than the dividend during periods when capital gains taxes are less than income taxes. This is what we find. Furthermore, the ex-dividend behavior of these funds generally moves in the direction we would expect across two changes in tax regimes. The taxable sample not only substantiates the tax effect, it also demonstrates that the fall in price greater than the dividend for closed-end municipal bond funds was not due to some peculiar aspect of either our methodology or the closed-end fund industry. Thirty-two years after E&G's original study, we find new and compelling evidence that taxes play an important part in affecting share price changes.

Dividend Policy of Indian Corporate Firms: An Analysis of Trends and Determinants

The present study examines the dividend behavior of Indian corporate firms over the period 1990 - 2001 and attempts to explain the observed behavior with the help of trade-off theory, and signaling hypothesis. Analysis of dividend trends for a large sample of stocks traded on the NSE and BSE indicate that the percentage of companies paying dividends has declined from 60.5 percent in 1990 to 32.1 percent in 2001 and that only a few firms have consistently paid the same levels of dividends. Further, dividend-paying companies are more profitable, large in size and growth doesn't seem to deter Indian firms from paying higher dividends. Analysis of influence of changes in tax regime on dividend behavior shows that the tradeoff or tax-preference theory does not appear to hold true in the Indian context. Test of signaling hypothesis reinforces the earlier findings that dividend omissions have information content about future earnings. However, analysis of other non-extreme dividend events such as dividend reductions and non-reductions shows that current losses are an important determinant of dividend reductions for firms with established track record and that the incidence of dividend reduction is much more severe in the case of Indian firms compared to that of firms traded on the NYSE. Further, dividend changes appear to signal contemporaneous and lagged earnings performance rather than the future earnings performance.

Tax Havens: Investment Distortions and Policy Options

Differences in business income tax rates among nations create the opportunity for tax minimization by diverting capital through lower tax jurisdictions. Furthermore, the opportunity to use a tax haven alters the relative rates of return between domestic and foreign investment. Financing reporting is often not sufficient to inform existing or potential stakeholders about the use of tax havens, limiting their ability to evaluate the risk of share price fluctuations in response to changes in tax regimes. For Canada, both national and international policy action is warranted in the context of these increasingly important issues.

A Stroke of the Chancellor's Pen: The Social and Regional Impact of the Conservatives' 1988 Higher Rate Tax Cuts

The geography of income and taxation is an important but underresearched subject. Given the uneven geography of incomes, changes in tax regimes are likely to have an uneven regional impact. The author examines the social and spatial impact of the Conservative government's 1988 higher rate income tax cuts in Britain. It is shown that, in addition to their highly regressive social impact, the 1988 tax cuts favoured the South East where the concentration of high income earners is most marked. This had a significant impact on the late 1980s consumption and housing market boom in the South East.

The Role and Impact of Commodity Market Institutions in the Determination of Oil Prices

The emergence of commodity market institutions in oil is examined in this paper. The demand for futures markets, an increase in trading, and other mechanisms for shedding risk are shown to have been created by changes in the structure of the world oil market. The primary contributors to these changes were the nationalization of the holdings of the multinational companies, changes in tax regimes in certain oil-consuming nations, removal of controls in consuming nations, and an increase in uncertainty about demand. These changes created a felt need for commodity market institutions. In addition, the following factor was required: the inability of the members of the Organization of Petroleum Exporting Countries (OPEC) to set and adhere to realistic output ceilings. It is suggested that the continued survival--let alone further growth--of these markets depends on OPEC's pst and prospective inability to control production.