Tax Changes Research Articles

Method of Management of Personal Income Tax Changes Implemented by the Polish Deal

Method of Management of Personal Income Tax Changes Implemented by the Polish Deal

Optimal Regulation of E-cigarettes: Theory and Evidence

We model optimal e-cigarette regulation and estimate key parameters. Using tax changes and scanner data, we estimate relatively elastic demand. A demographic shift-share identification strategy suggests limited substitution between e-cigarettes and cigarettes. We field a new survey of public health experts who report that vaping is more harmful than previously believed. In our model’s average Monte Carlo simulation, these results imply optimal e-cigarette taxes are higher than recent norms. However, e-cigarette subsidies may be optimal if vaping is a stronger substitute for smoking and is safer than our experts report, or if consumers overestimate the health harms from vaping. (JEL D12, D18, D61, H21, H23, I12, I18)

THE ISSUE OF PERSONNEL IN THE FIELD OF TAXATION IN THE UZBEK SSR (1946-1991)

This article discusses the issue of personnel in the field of taxation in the Uzbek SSR. At this point, it should be noted that, despite the determination of measures to reform the tax system and changes in the system, many shortcomings were observed in the issue of tax collection and collection due to the low level of knowledge, skills and experience of the employees in the regions.

Impact of an emissions-based car tax policy on CO2 emissions and tax revenue from private cars in Ireland

This article assesses private car CO2 emissions and car tax revenue in Ireland over the 10-year period following the introduction of an emissions-based car taxation policy in 2008. We build on a model of the Irish car stock, which has new car sales, car fleet mileage, and CO2 emissions intensity data to develop a bottom-up picture of historic CO2 emissions from the car fleet. In this article, we develop a counterfactual scenario following car purchasing trends in EU countries that did not introduce an emissions-based purchase and annual car taxes over the same period. Relative to this counterfactual scenario, the CO2 emissions intensity of the new car sales would have been 9% higher in 2018. This results in an estimated cumulative saving of 1.2 Mt CO2 from 2008 to 2018 brought about by the tax change. Total annual emissions from private cars were 4.4% higher in the counterfactual scenario. The tax change also led to a fall in annual motor tax revenues. Recorded receipts from annual motor tax were €0.77 billion in 2018. Our study shows that this would have been €1.1 billion in 2018 under the pre-2008 tax regime. The estimated cost of abatement in this case ranges from €1,500–€2,220 per tonne of CO2 avoided over the period 2009 − 2018. The study uses the novel technique of applying a technology stock model to better understand the longer-term consequences of a government policy.

Cheeseheads and Longhorns: Why Texas Should Follow Wisconsin’s Lead in the Treatment of Limited Liability Company Member Interests as Securities

The limited liability company has become one of the more attractive business associations, both for legitimate enterprises seeking flexibility in structure, shields from personal liability for company debts and obligations, and tax advantages, and for the not-so-legitimate enterprises seeking shelter from personal liability for taking advantage of the unwary. In order to assist and protect the investing public and to provide certainty and structure for business owners, Texas should amend its current statutory scheme to mandate the treatment of certain LLC interests as securities, modeling this legislation after the Wisconsin approach-a three-tiered method of defining an LLC as a security. Part II of this Comment will describe the LLC entity and its history, enumerate its advantages, and give a brief description of the 1997 IRS taxation changes. Part III will delve into the much-debated question whether LLC member interests are securities and will describe the benefits of treating them as such. Part IV will describe the Texas treatment of LLC member interests to date and the problems that accompany that treatment. Part V will describe some other states' treatment of LLC interests and how the Wisconsin approach is preferable. Part VI will enumerate the proposed changes to Texas law modeled after those states' regulations.

Do state tax changes affect corporate tax aggressiveness? US evidence

PurposeThe purpose of this paper is to empirically explore whether and to what extent the changes in state corporate income tax rates affect corporate tax aggressiveness.Design/methodology/approachUsing a differences-in-differences approach with dynamic treatment, the authors investigate the effect of staggered changes in state corporate income tax rates in the USA on corporate tax aggressiveness.FindingsFirms become more aggressive in avoiding taxes following state tax increases but are insensitive to tax cuts. The effect of state tax increases on tax aggressiveness is weaker for firms with greater debt tax shields and marginal tax rates. Firms are more likely to shift their operations and relocate their headquarters out of states experiencing tax increases.Originality/valueTo the best of the authors' knowledge, this paper is the first to study the relation between state tax policy changes and corporate tax aggressiveness. This paper finds an asymmetrical pattern of corporate tax aggressiveness in response to state tax changes.

Alcohol Policies, Consumption and Government Revenue: Indonesia

Research on alcoholic beverage consumption and related policies in Indonesia is minimal. Therefore, this study examines how policies affect alcohol consumption and government revenue, specifically excise tax revenue. First, this paper discusses the effect of alcohol tax policies and finds that an increase in the excise tax leads to increased product consumption. The implication is that the government must consider reform of the unrecorded alcohol market and alcohol tax. Subsequently, this paper discusses the effects of alcohol policy change and shows that tax changes lead to short-term reductions on alcohol consumption; thus, the government may perform frequent policy changes to reduce consumption. This paper also shows that a total ban negatively affects consumption; however, the reduction only affects the recorded alcohol supply, which is taxed and within government control.

Nonlinear Employment Effects of Tax Policy

AbstractWe study the nonlinear propagation mechanism of tax policy in a heterogeneous‐agent equilibrium business cycle model with search frictions in the labor market and an extensive margin of employment adjustment. The model exhibits endogenous job destruction and endogenous hiring standards in the form of occasionally‐binding zero‐surplus constraints. After parameterizing the model using U.S. data, we find that the dynamic response of employment to a temporary change in the labor income tax is highly nonlinear, displaying sizable asymmetries and state dependence. Notably, the response to a tax rate cut is at least twice as large in a recession as in an expansion.

Corporate Income Tax Changes in the Context of Earnings Management: a Review of the Literature

The purpose of the article/hypothesis: This paper aims to provide a comprehensive review of the theoretical and empirical literature regarding tax-induced earnings management. In particular, the association between anticipated tax changes and earnings management is of interest to the authors.
 Methodology: This paper uses a systematic literature review to achieve its research objectives.
 Results of the research: The presented research is mostly devoted to tax rate decreases and focuses on accrual-based earnings management methods. In anticipation of a tax rate change, companies shift their income from a high to a low tax rate period. Moreover, the probability of tax-induced earnings management is higher in case of extreme changes in the tax rate, larger prospects for tax savings as well as in case of private firms. This paper identifies several inconsistencies and gaps in the current literature, emphasizing that the connection between firms’ characteristics, the level of book-tax conformity and the practice of earnings management remains unclear.

The Effects of Tax Changes on Economic Activity: A Narrative Approach to Frequent Anticipations

Abstract This paper studies the effects of anticipations of tax changes on economic activity through the release of tax news in the media in the United States. I provide a measure of anticipations by exploiting the content of television news. This information typically flows faster than standard measures of gross domestic product, thus I propose a mixed frequency dynamic factor model to estimate both the economic activity latent factor and the effects of anticipated tax shocks on it. I find that one-month-ahead anticipations of tax cuts significantly stimulate current economic activity while those of tax increases produce the opposite effect.

Tax changes in the Czech Republic in the COVID-19 pandemic

The covid-19 pandemic has since March 2020 led to declarations of several states of emergency, to shutting down of schools, restrictions on gatherings as well as many business activities, with the aim to stopping the spread and transfer of the virus. Apart from the program of compensation bonuses, program Antivirus, postponing of the electronic sales record and so on, the state has reacted to the situation through tax legislation.The presented paper defines some steps as a result of the pandemic that are connected to tax law, these being specifically real estate tax, road tax, value added tax and excise tax.

Summaries of Papers In This Issue

Summaries of Papers In This Issue

The Impact of Corporate Income Tax Changes on the Welfare of Urban and Rural Households: A Computational General Equilibrium Approach

The Impact of Corporate Income Tax Changes on the Welfare of Urban and Rural Households: A Computational General Equilibrium Approach

Asymmetric Impact of Corporate Tax on Stock Market Development: Evidence from The Nonlinear Autoregressive Distributed Lag (ARDL) Approach

The stock market and tax policy are widely considered as two core factors for economic growth in any country. A well-developed and functioning stock market provides information on profit-making of successful investment projects, risk diversification, and efficient resource allocation. In addition to domestic resources, the stock market is also considered a crucial part of the global economy. In recent years most OECD countries, including the United States, have substantially reduced their corporate tax rates to stimulate investments, attract foreign capital, and achieve higher economic growth. Corporate tax cuts in a country are expected to positively affect stock market development by encouraging domestic investments and allowing for profit repatriation by multinational companies and foreign firms which will effectively lead to higher stock market development. Despite an extensive literature examining effects of tax policy and the stock market on economic growth, only a few studies have investigated the relationship between corporate tax rate and stock market development, and these studies have shown mixed results. This study investigates the link between corporate tax and stock market development for a group of nine selected OECD countries for the period of 1980-2018 using both long-run and short-run models. In addition to the Pesaran, Shin and Smith (2001) bounds testing approach to cointegration and error correction modeling using the linear ARDL model, we employ the Shin, Yu and Greenwood-Nimmo (2014) nonlinear cointegration approach to investigate the asymmetric impact of corporate tax changes on stock market development. Our findings indicate that, in the linear model in most of countries in this sample, corporate taxing adversely affects stock market development both in the short run and in the long run. In addition, as the first study using the N-ARDL estimation method to investigate this relationship, the robust and strong statistical results show that the effect of corporate tax on stock market development as a major part of financial market development is asymmetric. We show that corporate tax policies in the short run have a nonlinear, asymmetric impact on stock market development. The magnitude of the impact depends on whether the tax policy is a decrease or an increase in corporate tax. Furthermore, this effect changes among the countries in our study. For instance, the stock market's reaction to an increase of corporate taxing in the United States is much more rapid than that of decreases of corporate taxing. Corporate tax increases immediately and strongly affect the stock market, but the stock market takes years to incorporate the effect of tax decreases.

The Rise and Decline of LIFO

ABSTRACTWe trace the history of LIFO from the 1930s to 2021. LIFO usage rose sharply in the 1970s. LIFO's supporters praised its matching of recent costs against sales, and its nonrecognition of inventory holding gains. Managers appreciated its tax-lowering effects in inflationary periods. The 1970s LIFO adoptions spurred accounting research into market efficiency and accounting choice. LIFO's tax advantages began decreasing in the 1980s due to lower tax rates, low inflation, and changing inventory practices. Its theoretical justification weakened as the FASB adopted a Conceptual Framework in the 1980s that deemphasized matching, and instead valued relevance, decision-usefulness, representational faithfulness, and comparability. Without major tax advantages or strong theoretical justifications, LIFO usage declined markedly beginning in the mid-1980s. The IASB disallowed LIFO in 2005. By 2020, LIFO had become a niche method, surviving mainly due to the LIFO conformity rule. Whether its use will increase with renewed inflation is unclear.

A qualitative model of mining company taxpayer behaviour in the Lao PDR

The Lao PDR is economically dependent on natural resources, particularly gold and copper. Consequently, mineral taxation is an important source of government revenue. The Lao PDR is one of three Asia-Pacific case studies used in the author's research to examine the relationship between company behaviour and mineral law and taxation changes. The research method involved qualitative interviews with mining executives, with the results analysed using Grounded Theory. The case study looks at the central phenomenon that, far from being an automatic process, company behaviour in response to mining law and taxation changes is complex and depends on internal variables and perceptions of external events. The author argues that understanding the variables influencing the main mining players behaviour in mineral dependent economies is important to understanding the impact of policy changes. The article proposes a model and four theories arising from the interviews and validates the theories from the literature. The article presents new insights into company behaviour that may inform mining, law regulations and policy development in mineral dependent economies.

Do party politics still matter? Examining the effect of parties, governments and government changes on the local tax rate in Sweden

AbstractAccording to partisan theory, variations in policy choices and outputs originate from the party composition of the government studied. In this study, we take a novel approach to address such assumptions by linking changes in municipal taxes with local government changes. We also add a baseline scenario in which we examine whether the composition of the local government affects tax levels. Drawing on a dataset that contains official Swedish statistics from 1994 to 2018, we find convincing support for the partisan effect. Tax levels are higher under left-wing rule, and more specifically, tax cuts particularly occur when left-wing governments are replaced by right-wing ones. These results do not vanish when controls are accounted for, while it can be particularly noticed that the condition of the municipal economy influences partisan ambitions. These findings thereby contradict prior theoretical assumptions that the local arena is free from ideological battles.

Stock Market Response to Changes in the Statutory Corporate Income Tax Rate: Comparative Analysis between Developed and Developing Economies

In this study, the authors use an empirical approach to evaluate the impact of changes in the statutory corporate tax rate on stock market returns. The main objective is to investigate whether changes in income tax rates impact stock market returns and to examine the extent of this impact. According to the United Nations country classifications, the authors categorized the sample economies into two types: developed and developing1. The study further scrutinizes the differences in the outcomes when comparing developed with developing economies using a comparative study approach. Data on corporate tax rates and corresponding stock market returns are analyzed for developed economies of Japan, US and Italy, and developing economies of South Africa, Malaysia and India. The study uses panel data regression and correlation analysis of the variables of stock market returns and corporate tax rates from1990 to 2010. The statistical analysis revealed that the only significant impact was of tax cuts on stock market returns in general, and developed countries responded more strongly to tax cuts. For a 1% tax cut in rates, the stock markets could expect an increase in returns of 0.185% in the year of the tax change. Tax hikes, however, did not reveal any significant adverse effect on stock market returns. Hence, it is pertinent to note that developed and developing economies exhibit varied behaviors toward corporate tax policies and governments could make calculated decisions, considering the consequences of their tax policies on capital markets and corporate valuations.

Accounting and taxing system in conditions of the state of war: how to act and what the consequences

Introduction. The state of war caused by the full-scale Russian invasion of Ukraine is causing changes in the functioning of the economy. For more than 55 days of heroic resistance of the Ukrainian people, Ukrainian the authorities have been taking measures to support economic entities whose activities are extremely important for the launch of the economy during the war. One of the current tools to influence the activities of economic entities is taxation and proper adaptation of accounting to the introduced economic transformations. Legislative changes have softened the first blow and prevented panic in the financial sector. However, given the risks of long-term hostilities, it is important to develop a policy of economic stability in the conditions of war and to analyze the consequences of the changes introduced today and their repercussions in the future.Purpose. The purpose of this publication is to analyze the existing changes in the functioning of the accounting and taxation system during the state of war, their consequences and find ways to adapt to these conditions in the context of supporting the state economy.Research methods. The research process was conducted using a dialectical approach to the study of the current state of accounting and taxation of domestic economic entities and using methods of cognition: deduction and abstract-logical cognition - to determine the content of taxes, cost elements; abstraction and concretization - to outline areas of tax burden optimization; grouping, comparison, generalization in the process of forming research results.Results: The existing legislative reforms of the state of war of the simplified taxation system for small, medium and some large enterprises as the main fiscal elements of the impact on the activities of economic entities are analyzed. The main nuances of the application of the introduced tax changes (restrictions on application, rules of transition, post-war return) and their content are presented.The peculiarities of the activity of the enterprise in full or partial downtime are investigated and the algorithm of idle time during the state of war (registration, cost accounting, wages) is proposed. The list of the most common problems of wages in the state of war and the proposed ways to solve them is outlined. The aspects that should be taken into account by the accounting staff are considered and the mechanism of actions for assessing the risk of the impact of the sanction is presented.Perspectives. These recommendations increase the potential use of tools, in the context of supporting the state economy, to reduce the tax burden on domestic enterprises and adapt accounting to the state of war. Support for business will continue to be important as a key factor in increasing the economic stability of the state, which also contributes to effective resistance to the attacker. In the future, after the Victory of Ukraine, it will be necessary to introduce a consistent mechanism for the development of the postwar economy, one of the elements of which should be the optimization of the tax burden and compliance with international accounting.

Impact of Indirect Tax Reforms in India

In this paper, we have analyzed what is the impact of Indirect tax reforms in India, as we all know how indirect taxes played progressively vital role in the Indian economy. Excise duty was first introduced in India in 1944. The change in the Indirect taxes was anticipated after independence. As Goods and Services tax (GST) is India’s most significant tax reform, which went into effect on July 1st, 2017. It was eventually superseded by all the indirect taxes levied by Federal and State Governments on Goods and Services. Indirect taxes are imposed on goods and services due to which consumer ended up paying more for the products. The time limit for paying tax was extended during the Covid-19 pandemic. There were several GST compliance relief measures announced by union finance minister during worldwide pandemic. Through our research we come to know about that the introduction of GST boost economy growth and give rise to GDP growth by 1.0% to 3.0%.