Higher Tax Rates Research Articles

Do tax incentives affect investment quality?

This paper examines the effect of tax incentives in the form of bonus depreciation on investment quality. Using the expiration of tax incentives via bonus depreciation in eastern Germany and a representative panel of West German establishments, we show that bonus depreciation significantly lowers investment quality. The average quality of investments, measured by the responsiveness of future revenue and other proxies for cash flow to current investment, reduces by 15.2–23.8% in the short run and 31.8–41.4% in the long run. Our research suggests that this adverse effect of tax subsidies is greater for jurisdictions with higher tax rates, in times of high unemployment, and for large or low-productivity establishments. Overall, while increasing investment quantity, as shown by prior literature, tax incentives such as bonus depreciation substantially reduce the quality of investments.

Theoretical approach to tax compliance

Purpose- The aim of this study is to emphasize the importance of efficiency in tax compliance and to reveal the factors that increase tax compliance. Methodology- The factors that are effective in tax compliance are explained within the framework of domestic and foreign literature. Findings- Tax compliance is high in countries characterized by high economic freedom, significant capital markets, effective competition laws and low rates of serious crime. In a secure environment that improves their quality of life, where individuals can exercise their economic rights in terms of significant capital markets and effective competition laws, they tend to view tax compliance as less of a burden and more of a civic duty. Tax compliance is high where tax morale is high. When trust in authorities is high, taxpayers will pay their taxes voluntarily. Paying taxes is a civic duty, while tax evasion is immoral. Tax awareness increases if individuals feel the tax obligation in their conscience, if they have a sense of the need to pay taxes, if the level of education and culture is high, if government services are transparent and if the government imposes sanctions on those who do not pay taxes. High tax rates and an unfair tax system are associated with low compliance. Conclusion- The results of this study provide insights for researchers on the factors affecting tax compliance. Keywords: Tax compliance, tax, government, taxpayer, tax authorities. JEL Codes: H20, H21

Navigating the complexities of section 100A: a look at the future of trust taxation in Australia

Abstract Section 100A of the Income Tax Assessment Act of 1936 is a provision designed to prevent arrangements in which a distribution is made to a beneficiary with a low tax rate, yet, the economic benefit is conveyed or paid to a second beneficiary with a higher tax rate. The Australian Taxation Office provided its final guidance on this provision very recently. This article provides an overview of the guidance, analyses cases regarding the application of Section 100A, and assesses the guidance’s potential future implications on trust taxation in Australia.

Optimal Financing Decision for Supply Chain under Different Carbon Emission Limitation Policies

With the characteristics of credit enhancement and low cost, supply chain finance is one of the effective ways to solve the "difficult and expensive financing" of small and medium-sized enterprises. In order to achieve the goal of carbon peaking and carbon neutrality as early as possible and to deeply implement the concept of sustainable development, we need to consider the impact of carbon emissions on supply chain financing methods in the study of supply chain finance. The existing carbon emission limitation policies include quantity (carbon cap-and-trade) and price (carbon tax) policies. Therefore, this paper incorporates both policies into the supply chain to consider the policy effects of the two policies being implemented simultaneously. The supply chain consists of a manufacturer with limited capital and a retailer with sufficient capital. Under bank financing, zero-interest early payment financing and in-house factoring financing, this paper simultaneously studies the effects of carbon tax rates and carbon emission trading prices on the supply chain's decision variables and profits by applying the Stackelberg game approach. The numerical simulation results show that the supply chain's profits are lower when emissions exceed standards than its profits when emissions do not exceed standards. Under the high carbon tax rates and high carbon emission trading prices, the optimal financing method is bank financing. Under the low carbon tax rates and low carbon emission trading prices, zero-interest early payment financing and in-house factoring financing are the optimal financing methods. As consumers' green sensitivity of rises, the policy's regulation scope of optimal bank financing is restricted, however, the policy's regulation scope of the other two financing methods is expanded.

Manufacturers' product-line strategies under various government regulations

Severe environmental pollution and shortage of resources have led the government to issue strict regulatory policies, such as cap-and-trade, strict carbon cap, and carbon tax. Moreover, the manufacturer can design two kinds of product lines to respond to government regulations. Specifically, the manufacturer can produce normal products (NPs) with higher prices and emissions, and low-carbon remanufactured products (LCRPs) with lower prices and emissions. This paper studies how the manufacturer designs the product line under different regulatory policies. The results show that, under cap-and-trade, when carbon quotas are fewer (relatively higher), the manufacturer would produce NPs and LCRPs (only LCRPs); when carbon quotas are very large, the manufacturer's production would grind to a halt. Moreover, under the strict carbon cap, the manufacturer would produce only LCRPs in the lower carbon cap and produce both NPs and LCRPS in the relatively higher cap. Besides, under the carbon tax, the manufacturer would produce NPs and LCRPs at a lower tax rate, produce only LCRPs at a relatively high tax rate, and stagnate production at a very large tax rate. Furthermore, we analyze consumer surplus and social welfare under different government regulations.

Analysis of the Factors Affecting the Performance and Success of Rural-Women Entrepreneurs: Evidence from North Eastern Nigeria

This study analyzed the factors affecting the performance and success women entrepreneurs in North Eastern Nigeria. The study adopted a descriptive survey research design with the samples of 283 rural women entrepreneurs selected from the study area comprising twelve (12) LGAs within the six states in the using purposive sampling. The study applied frequency, percentage, mean and standard deviation in analyzing the data. The results of the analysis revealed that, lack of access to loan; finances, mobility and higher tax rate are the major obstacles that affect the women entrepreneurs particularly within the rural areas of the North Eastern region of Nigeria. The study also found that; absence of government supports, grants and suitable credits facilities, are the economic factors that affect the performance of such entrepreneurs. Finally, from the results it was discovered that, societal attitudes, domestic violence, illiteracy and lack of awareness are the socio-cultural factors that negatively affects the performance and successes of women entrepreneurs in the region. From the results, the study recommends that, government at all levels, religious institutions, private sector and other stakeholders should jointly provide enabling environment for women entrepreneurs particularly within the rural areas of the North Eastern part of Nigeria.

On the connection between cultural values and personal income taxation

The article explores the relationship between Hofstede’s cultural dimensions and personal income taxation, as it is, what was never done in the scientific literature. It briefly describes the current level of scientific discourse and history of thought development in this problem field, forming the theoretical basis for substantiating the assumed relationship. Using theoretical reasoning as well as comparative quantitative methods (logistic and linear regression analysis), the paper shows the connection between some of Hofstede’s cultural dimensions (power distance, individualism) and the establishment of progressive income taxation and top marginal tax rates. It is found that lower scores of power distance are associated with progressive income taxation, as well as higher tax rates. In addition, some potential mechanisms underlying this relationship are discussed. It is emphasized that cultural values can have two levers of influence on tax policy (bottom-up and top-down), since both the politicians responsible for designing tax systems and the citizens who shape the redistribution demand carry the national cultural values. The sample under study includes 115 countries at different levels of economic development.

TIME-SERIES ANALYSIS OF FEMALE EMPLOYMENT IN JAPAN

In Japan, the declining birthrate and an aging population have made the labor supply by women very important. Numerous studies have analyzed the choice of women in having children or continuing to work. These studies provide very important insights into the employment choices of Japanese females. However, they mainly use micro data and focus only on specific time points. In this study, we investigate the effects of the average income, tax rate, and rate of advancement to university on employment behavior among Japanese women using time-series data. The results of multiple regression analyses suggest that male regular employment rate, average annual household income, female university advancement rate, and consumption tax rate have different effects on regular and non-regular employment rates of Japanese women. The male regular employment rate has positive effects on female regular employment rate, but it has no effect on female non-regular employment rate. The high household income seems to reduce the probability of women working as non-regular workers but does not seem to reduce the probability of them working as regular workers. The consumption tax rate has effects only on female non-regular employment rate. A high consumption tax rate promotes the female labor supply as non-regular workers.

НАЛОГ НА ПРИБЫЛЬ КАК ИНСТРУМЕНТ СТИМУЛИРОВАНИЯ ИННОВАЦИОННОЙ И ИНВЕСТИЦИОННОЙ АКТИВНОСТИ В РОССИИ

In modern conditions, income tax is becoming an increasingly important tool for regulating the Russian economy. The tax policy in the field of corporate income taxation should stimulate the development of innovation and investment activity, which is a key factor in increasing the competitiveness of the national economy and ensuring its sustainable growth. First of all, it should be noted that income tax directly affects the financial capabilities of enterprises for innovation and investment activities. Lower income tax rates, especially for small and medium-sized enterprises, can stimulate their investment and innovation activity, as this will allow them to allocate more funds for these purposes. In addition, the income tax can also help attract foreign investment in the Russian economy. High income tax rates may discourage potential investors, while lowering income tax rates and creating tax incentives for investors may attract additional investment.

A COMPARATIVE STUDY BETWEEN THE OLD INCOME TAX AND THE NEW TAX REGIME ON INDIAN INDIVIDUAL TAX PAYERS

The Indian government has announced a new tax slab in the Union Budget for 2020–21. The government did not abolish the previous tax system; this new tax slab is sometimes referred to as an optional tax regime. The option for the taxpayer is to select the tax regime—either the old or the new. Compared to the previous tax structure, the new tax regime features a lower tax bracket. The option for the taxpayer is to select either the new tax structure with lower tax slabs or the previous tax structure with higher tax slabs but tax benefits. The previous tax system allowed taxpayers to make use of existing tax breaks such as the house rent allowance, leave travel allowance, and other deductions allowed by the Income Tax Act of 1961. The advantages of the current exemptions and deductions that are offered under the old tax regime will not be available to individuals who choose the new tax regime. The new tax system has a lower tax rate and six tax slabs, compared to the old tax system's higher tax rate and three tax slabs. In both tax regimes, the tax rate for individual under 60 is comparable because they are exempt up to 2.5 lakh. Additionally, individuals who are residents of India for income tax purposes are eligible to claim a tax rebate of up to Rs. 12,500 against their tax liabilities under Section 87A, provided taxable income does not exceed Rs. 5, 00,000.

The Implementation of Tax Laws on Cryptocurrencies and NFTS in Indonesia is Progressing Well

This study investigates the possibility of taxing digital assets such as cryptocurrency and NFT in order to raise funds for the government. Using normative research approaches, it is possible to determine if cryptocurrencies and other digital assets (NFT) should be subject to high or low tax rates. The study looked at the tax policies of numerous countries addressing cryptocurrencies and digital assets, in addition to studying bitcoin tax laws and NFT. Different laws, methods, and issues apply to the regulation of cryptocurrencies and NFT depending on the jurisdiction. There is no universal agreement on this. Keywords: taxes, cryptocurrencies, digital assets, NFT

The Quest for Effective Tobacco Control Strategies: Revisiting Price and Taxation Policy

The prevailing wisdom in scholarly and policy-making institutions dealing with public health is that skillful use of price and taxation policy will reduce the prevalence of tobacco consumption because of the inverse relationship between tobacco price and consumption. Empirical evidence of this axiomatic inverse relationship has been sparse. This paper analyzes the effects of increased taxation on consumption of tobacco products in 162 countries during 2005-2020. Results indicate that there is weak negative relationship between change in adult smoking prevalence and change in taxation suggesting that higher tax rates on tobacco products tend to lower adult smoking prevalence, but in a modest rather than robust sort of way. The small negative association indicates that perhaps it will take very large tax increases to meaningfully affect adult smoking.

Which multinationals can escape high Statutory Tax Rates? The Profit-Shifting strategy to reduce taxes

ABSTRACT Multinationals can escape high Statutory Tax Rates (STRs) by way of Profit-Shifting (P-S) and in this form, reduce the Effective Tax Rate (ETR) they ultimately pay. In this article, we find evidence for Spain consistent with P-S, since the relationship between STRs and ETRs becomes negative for multinationals with characteristics that may facilitate P-S, i.e. being very large, having at least one tax haven affiliate, and owning Intellectual Property.

Doing Business and Tax Evasion: Evidence from Asian Countries

The study examines the relationship between doing business factors and tax evasion in Asian countries. To this end, Ordinary Least Square (OLS), along with a fixed and random effect model, was used to analyze the 5-year data (2011–2015) of 35 Asian countries obtained from the global competitiveness report and World Development Indicators. The findings indicated that a high level of corruption, a high tax rate, limited access to finance, strict tax regulation, government instability, and poor ethics promote tax evasion. Extending the socio-economic theory, the findings of the study provide the tax administration and governments of Asian countries with insights into the mechanism by which certain business factors influence tax evasion. Moreover, the study offers some valuable guidelines for formulating suitable economic policies that engender a reduction in tax evasion.

Corporate Tax Rate, Financing Policy and Investment Decisions: Evidence from 8 Asian Economies

This study intends to examine the heterogeneous impact of corporate tax rates on financing policy and investment decisions. It further quantifies how different financing options can alienate the adverse impacts of corporate taxation on industrial investment decisions. The empirical analysis is based on ten years of financial information relating to non-financial sector firms from eight Asian economies. For the regression analysis, we employ panel EGLS and the system GMM model. The statistical analysis of the study first reveals the negative and significant influence of corporate taxation on industrial investment. It also suggests the dynamic impact of different financing options on corporate investment decisions. The statistical analysis further documents the positive impact of corporate taxation on bank and trade credit financing as well as the negative effect on equity financing. In addition to linear analysis, the findings of study corroborate the existence of the moderating expression of financing options on corporate tax rates and the industrial investment relationship. Based on empirical analysis, it can be suggested that corporate managers should acquire more funding, specifically debt financing, to maintain investment volume during a period of high corporate tax rates. This study substantiates the co-association among three strategically linked decisions and suggests the significance of debt financing for mitigating the adverse impacts of taxation on corporate investment.

Property tax as a policy against urban sprawl

In theory, different property tax regimes can be used as levers to influence building development. In practice, however, property taxation might not be an effective policy tool for encouraging sustainable land use. For example, higher property tax rates can have contrasting effects on urban sprawl depending on whether the dwelling size effect or the improvement effect prevails. The dwelling size effect suggests that higher property tax rates lead to less urban sprawl because landowners choose to build smaller houses on smaller plots, while the improvement effect predicts more urban sprawl with a lower density of structures because a higher tax rate would encourage fewer multi-storey units. Therefore, it is essential to evaluate the empirical ex-post impact of various property tax regimes and tax rates on development to determine how to best use property taxes to encourage sustainable land use. This paper presents the findings of a literature review of ex-post empirical studies regarding the efficacy of property tax in encouraging sustainable land use in the residential sector. Results indicate that property tax can be an effective tool for reducing urban sprawl when the design of the property tax is carefully considered. Different tax regimes can affect construction activity in terms of location, the size of housing units and density patterns. For example, depending on the location, a split-rate tax system can be effective against urban sprawl because it encourages higher densities.

Low-Carbon Transition Models of High Carbon Supply Chains under the Mixed Carbon Cap-and-Trade and Carbon Tax Policy in the Carbon Neutrality Era.

To achieve the goals of carbon peak and carbon neutrality, the low-carbon transformation (LCT) of high-carbon firms is inevitable. We construct game models of a supply chain with different dominant types under a mixed carbon policy that embraces carbon cap-and-trade and carbon tax. Solving each dominant model, we derive the effective area and optimal threshold of the mixed carbon policy to guide LCT. We find that the selling price, market demand, and profit of the supply chain system are equal in different dominant models due to the mixed carbon policy, but when a company dominates the supply chain, its profit is higher than when it is a subordinate. In addition, the high-carbon manufacturers (HCM) will pursue LCT only when the sum of the carbon tax rates and carbon trading prices is within a certain threshold, and the subordinate HCM are more likely to be driven to pursue LCT. Therefore, the government should adopt a differentiated hybrid carbon policy, setting a high (low) carbon tax rate for the HCM in a dominant (subordinate) position.

The Effect of Tax Rate on Taxpayers' Voluntary Compliance in Tanzania

Tax is an important financial payment made by a person or body of people in the bearing of the spending of public power. Taxes are significant for individuals and the nation at large. The purpose of this study was to find out the effect of the tax rate on taxpayers' voluntary compliance in Tanzania. In addressing this objective, both qualitative and quantitative research approaches were used. A cross-sectional survey research design technique was used. The study employed document review, and survey in collecting both primary data and secondary data. Besides, systematic, unsystematic random sampling and purposive sampling were used as sampling procedures in this study. The study involved a sample size of 99 respondents who are SMEs' taxpayers. The findings of the study showed that there is a negative effect of the tax rate on taxpayers' voluntary compliance. Again, the study indicates that the presence of good tax rates improves taxpayers' voluntary compliance and the tax rates influence taxpayers' voluntary compliance. Lastly, there is statistical significance between tax rates and voluntary taxpayers' compliance in Tanzania. The study recommends that the estimation calculation base should be reset in tax rate and the critical involvement or participation during formulating of tax laws and regulation is very important to improve corporate governance, especially between government and people. Consequently, tax rate and taxpayers' voluntary compliance have a negative relationship. The contribution of this study is to examine the effects of the tax rate on voluntary tax compliance as an economic variable, but most of the studies already done on the effect of the tax rate on tax compliance are based on an institutional variable, the practical implication of the result indicated that the tax rate associated with tax is very high that affect the non-tax compliance, while the social implication of the study is that high tax rate causes the government to lose revenue and hence diminishes the efforts of providing social services to the citizens.

Vehicle taxation should be reconsidered

Vehicle taxation is a global issue. When considering the appropriate tax regime for vehicles, states consider a variety of factors. Among others, vehicle taxation takes into consideration traffic congestion (loss of time), environmental issues such as air pollution, accidents, noise, land use for roads and parking lots, costs of control and enforcement system, damage to the natural environment, and much more.
 Israel imposes purchase tax on vehicles, which is a tax quite equivalent to GST or excise duty.
 As will be presented below, in 2022, apparently, Israel's vehicle taxation, imposes 83% purchase tax on vehicles, is probably the highest in the world.
 Vehicles are a daily, routine product that exists in almost every home worldwide. A vehicle isn't a luxury product anymore, but Israel, according to the tax rate, still considers it a luxury.
 The high tax rate has not achieved its goal, to discourage the usage of personal vehicles and shift to public transport.
 The high tax regime encourages repetitive debates between importers and that customs authority, concerning the vehicles value, for customs purposes.
 A reform in this field is needed. Maybe it's time for Israel to reinvent to wheel in this area, and impose a fixed tax, ignoring the vehicle's price.

Impact of Taxation on Economic Growth: Empirical Evidence from Pakistan

Purpose: Governments rely on taxes, but a high tax rate can slow economic growth. Fiscal policy objectives can be achieved most effectively by lowering tax collection costs and boosting economic growth through efficient taxation. This study aims to find the impact of tax revenue on Pakistan's economic growth.
 Design/Methodology/Approach: The time series dataset spanning 1985–2021 is used for the current analysis. GDP is used as the dependent variable, while tax revenue and other fiscal policy variables like government spending, inflation, gross fixed capital formation and current account balance are used as the explanatory variables. The stationarity of the data is checked using the ADF test. The results of the ARDL bound test, which is used to determine whether there is a long-term link between the variables and a short-term relationship, indicate a long-term relationship.
 Findings: Current analysis reveals that tax revenue and inflation have a negative and significant impact while government expenditures and gross fixed capital formation have a positive and significant impact on the economic growth of Pakistan.
 Implications/Originality/Value: According to the study's results, Pakistan's government should ensure that tax rates are set at the right level to bring in enough money to pay for government spending that helps the economy grow.