Impact Of Tax Rates Research Articles

Impact of Tax Rates and Sales Growth On Tax Avoidance

This research aims to examine the effect of tax rates and sales growth on tax avoidance. This research is focused on telecommunications companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2022 period. The sampling technique uses the purposive sampling method which amounts to 42 samples. As for the data analysis technique used is multiple regression analysis by testing classical assumptions first. The results of the data analysis that have been carried out show that the tax rate does not affect tax avoidance in telecommunications companies, while sales growth has an influence on tax avoidance of 0.389 which is included in the low category, then the tax rate and sales growth have an influence together on tax avoidance by 13.5%.

ASSESSING THE EFFECTIVENESS OF TAX INCENTIVES AND THEIR IMPACT ON STIMULATING ECONOMIC GROWTH

The article examines the effectiveness of tax incentives and their impact on economic growth. Also, the impact of tax credits on investment, employment and innovation, the effectiveness of tax credits in different sectors and types of incentives, and the impact of tax rates, administrative complexity, and taxpayer behavior on the effectiveness of tax credits were studied.

The impact of tax rates on tax evasion: A macroeconomic study

Research Question: What is the impact of high tax rates on the level of tax evasion in different economies? Motivation: after the occurrence of the famous panama papers and paradise papers scandal (Alstadsaete et al., 2019) and seeing that tax burden has been incessantly increased due to higher tax burden (Slemrod, 2017). Many research papers focused on the impact of tax evasion on the equilibrium of economies (Fisman & Wei, 2004; Picur & Riahi-Belkaoui, 2006). That’s why we tried in our research paper to insist on the growth of the income tax rate as a principal determinant of tax evasion by emphasizing the importance of the economic characteristics of different countries. Idea: We examine the impact of tax burden on the level of tax evasion by analyzing the relationship between tax rates and tax evasion in the developed and emerging countries while taking on consideration their economic characteristics. Data: First of all, we analyze a sample of 143 countries where we focus on the cited relationship, then we divide this sample into 33 developed countries and 110 emerging countries. The collected data are related to the period preceding the publication date of the panama papers. Tools: We use a cross section analysis based on univariate and multivariate regression model applied for the whole sample and the two cited subsample groups. Findings: We find a positive and significant relationship between tax rates and tax evasion. This relationship no longer remains significant in the first group of the study which is composed by 33 developed countries however the second group composed by 110 emerging countries indicates that there is a positive and significant relationship between the two studied variables. Hence, in the following research we will strive for highlighting the main discriminate variables between both of the two cited samples. Contribution: The empirical findings have economic and tax implications for governments and decision and policies makers especially in economies with high levels of tax evasion.

Social Norms Moderate the Effect of Tax System on Tax Evasion: Evidence from a Large-Scale Survey Experiment

In this study, we reconcile conflicting findings from the extant literature on the impact of tax system parameters on tax noncompliance. We argue that social norms play a role of heuristics facilitating tax payers’ response to the instrumental incentives posed by the systemic parameters, such as tax rate and penalties for evasion, and thus moderate the effect of those parameters on willingness to evade taxes. Relying on a unique survey experiment conducted in fourteen countries of Central-Eastern Europe, we demonstrate two types of a conditioning effect of norms. First, the impact of tax rates on respondents’ propensity for tax evasion is moderated by the perceived norms of the society at large (descriptive norms). In particular, an increasing tax rate lowers the probability of evasion as long as one views “most others” as honest taxpayers, which highlights the importance of equitability (fairness) concerns for tax compliance decisions. In contrast, the impact of punishment is moderated by the perceived norms of one’s immediate reference group (subjective norms). Strong subjective compliance norms tend to effectively replace penalties as a mechanism discouraging tax evasion, suggesting that the deterrent effect of a penalty can be entirely suppressed when subjective norms are strong. These findings have important implications for the understanding of tax compliance decisions under different formal and informal regimes.

The effect of production- versus consumption-based emission tax under demand uncertainty

Emission tax is an instrument widely adopted by countries and regions to incentivize emission abatement by emission-intensive firms including manufacturers. However, policies differ in how they allocate emission responsibilities among stakeholders. For example, the Chile emission tax directly penalizes manufacturers for the emissions they generate during their production (production-based emission tax), whereas the Sweden electricity emission tax penalizes the consumption of electricity rather than its production (consumption-based emission tax). These two methods have potentially varying implications on manufacturers' profits, their emission abatement decisions, as well as the resulting emission levels, especially when demand uncertainty is involved. In this paper, we investigate the impact of the two distinct methods by studying a profit-maximizing manufacturer facing stochastic demand. Under either production- or consumption-based emission tax, the manufacturer's optimal decisions on its selling price, production quantity and emission abatement investment are derived. Perhaps surprisingly, we show that under either tax, it is possible for an increase in the emission tax to discourage the manufacturer from investing in emission abatement. The impact of tax rate, abatement technology efficiency, and demand uncertainty on the manufacturer's profitability and abatement decision are also studied. Interestingly, higher demand uncertainty may motivate the manufacturer to invest more in emission abatement under production-based emission tax. Using a numerical example of an electricity power generator, we offer further insights into the comparison between the two taxes and find that there exist cases for either tax to dominate the other in terms of both profit and emissions.

The impact of tax rates, political partisanship and economic variables on the distribution of state and local tax burdens

This study finds that the effective state and local tax rate for the top 1% of income households as a percentage of the effective state and local tax rate for the bottom 20% of income households in 2002 is significantly influenced by whether a state has a multi-rate income tax, right-to-work laws, the liberalism of a state's electorate, the average tax burden in a state and past tax policy. Democratic Party strength in state government, Republican or Democratic Party institutional control of state government, change in real per capita income, a Democratic Governor and the change in the share of income going to the top 1% of income households are not significant predictors. The empirical results are identical for the top 2–5% of income households to the bottom 20% of income households.

A contest with the taxman – the impact of tax rates on tax evasion and wastefully invested resources

We develop a moral hazard model with auditing where both the principal and the agent can influence the probability that the true state of nature is verified. This setting is widely applicable for situations where fraudulent reporting with costly state verification takes place. However, we use the framework to investigate tax evasion. We model tax evasion as a concealment-detection contest between the taxpayer and the authority. We show that higher tax rates cause more evasion and increase the resources wasted in the contest. Additionally, we find conditions under which a government should enforce incentive compatible auditing in order to reduce wasted resources.

Discussion of The Effect of State Income Tax Apportionment and Tax Incentives on New Capital Expenditures

Gupta and Hofmann (2003) (hereafter GH) examine the impact of four state income tax characteristics on new capital expenditures by businesses within a state. In particular, the authors consider (1) state tax burden (as measured by the product of a state’s highest statutory tax rate and its property factor weight), (2) the number of tax incentives offered by a state, (3) whether a state has unitary reporting, and (4) whether a state has a throwback rule. Unlike prior research, the authors consider all four tax factors in their empirical analyses. Perhaps due to the omission of one or more of these state tax factors, prior research contains conflicting evidence regarding the impact of tax rates and apportionment factors on economic development within the states. I will first analyze the unitary reporting classification scheme utilized in this paper, and then I will evaluate the model specification and estimation procedures. Finally, I will close this discussion with implications for future research.

Currency, Marginal Tax Rates, and the Underground Economy

This paper has attempted to isolate that portion of the underground economy which is both measurable and controllable. The standard variables postulated by Cagan, income and interest rates, are still important, although the value of the income elasticity of currency demand may be larger than expected. Marginal tax rates have a positive and significant influence on currency holdings, which supports Tanzi's work and contradicts the findings of the Internal Revenue Service. While not all the increase in currency holdings in the last 20 years can be explained by using tax rates, somewhere between $11 and $12 billion worth of currency can be attributed to that source. While unemployment compensation ought to affect the size of the underground economy, no statistical verification can be found through the specification contained here. Finally, it is noted that the trend toward less currency holding, which one would expect from the recent banking innovations, would have occurred had not other forces offset it. One of the forces which has probably led to an increase in currency holdings is increased drug-related activity. However, that portion of the underground economy which exists because of crime has been largely ignored here because little of it can be controlled by economic policy. What is explored here is a measurement of how much underground activity we could dissuade by lowering taxes, and further, how those lower taxes would influence tax collections. The effects appear to be large enough to warrant concern about the impact of tax rates on incentives.

Tax Illusion and the Labor Supply of Married Women

THE economic and demographic determinants of the labor force behavior of married females have been studied intensively.' Many of the important variables have now been isolated: education, age, income of husband, number of children, etc. However, as will be discussed below, the existing literature pays insufficient attention to the fact that U.S. income tax laws have placed a large burden on the earnings of married women. When a married couple chooses to enjoy the tax advantages of filing jointly, the first dollar earned by the wife is in effect taxed at the same marginal rate as the last dollar earned by the husband.2 The purpose of this paper is to present some empirical results on the impact of tax rates on the labor supply of married women. Explicit attention is focused on the extent to which individuals react to net rather than gross wages. The evidence strongly supports the view that it is the net wage that matters in the hours of work decision. Section I briefly discusses how taxes have been treated traditionally in the analysis of labor supply. Section II presents a model for examining the impact of taxes on labor supply, and section III contains the results of an empirical test of this model. A concluding section discusses work in progress which will refine and extend the results of this paper.