Nominal Tax Rates Research Articles

EU Company Taxation in Case of a Common Tax Base

Within the EU the relation between financial and tax accounting will be significantly influenced by the regulation adopted in June 2002 that obliges all listed companies to prepare their consolidated accounts according to International Accounting Standards/International Financial Reporting Standards (IAS/IFRS). Since dependency of financial and tax accounting according to different degrees prevails in all EU member states a linkage between IAS/IFRS and tax accounting seems to be possible. Compared to national GAAP the advantage of IAS/IFRS as a starting point for tax accounting derives from the advantages of the creation of a common tax base in the EU. However, the adoption of IAS/IFRS has to be restricted to those standards that are convenient for tax purposes. In particular, this means that tax accounting still has to follow the realisation principle as a general principle; the IAS/IFRS fair value-accounting therefore cannot be adopted for tax purposes. In this paper we present estimates for the consequences of IAS/IFRS-based tax accounting on the comparative effective tax burdens of companies in 13 countries (Austria, Belgium, the Czech Republic, France, Germany, Hungary, Ireland, Latvia, the Netherlands, Poland, Slovakia, the United Kingdom, and the USA). Therefore, certain provisions of IAS/IFRS were considered as a starting point for the tax base. The effective tax burdens are calculated on the basis of the European Tax Analyzer model which was enhanced for the purposes of this study. A further question arises as to what extent an exclusive harmonisation of the tax base will effectively reduce the current EU-wide differences of effective company tax burdens. It turns out that a common tax base cannot alleviate the current EU-wide differences of effective company tax burdens. A major finding of our study reveals that the effective tax burdens in all countries considered here (except Ireland) tend to increase slightly since the tax bases tend to become broader. This offers the possibility to member states to reduce the nominal tax rate leaving the overall effective tax burden unchanged. A tax policy of tax cut cum base broadening would not only tend to increase the attractiveness of the member states as a location for companies. At the same time, this would reduce dispersions of effective tax burdens across industries. Therefore, such a tax policy is in line of the long term Community goals to become more competitive in international terms.

Die deutsche Steuerbelastung im internationalen Vergleich: Warum Deutschland (k)eine Steuerreform braucht

Abstract This paper attacks the widespread view that the latest (corporate) income tax reform in Germany was urgently needed to reduce the tax burden on the German economy. In the run-up to this tax reform, the public debate focused on nominal income tax rates and hence neglected the determination of the tax base. Empirical results on effective tax burdens in OECD countries show that a reform of German (corporate) capital taxation cannot be justified on the grounds of the tax burden. The international comparison of effective average tax rates shows that the corporate tax burden in Germany steadily declined from 1980 and was in 1996 lower than in most other industrialised countries. However, we argue that not only the actual tax burden but also the complexity of a tax system determines its international competitiveness. A German tax reform was - and still is - necessary due to the lasting complexity of the tax system and the relatively high tax burden on labour.

State Revenue Extraction from Different Income Groups: Variations in Tax Progressivity in the United States, 1916 to 1986

We examine the conditions that affected the progressivity of the individual income tax in the United States between 1916 and 1986. A multivariate time-series analysis shows how macroeconomic conditions, state imperatives, the organizational capacities of social classes, and political conditions have affected the progressivity and the symbolic component of the income tax. Progressivity is measured by the difference between the effective tax rates paid by moderate income and very high income families. The symbolic component of this tax is measured by the difference between the nominal tax rate and effective income tax rate paid by very high income families. The results reveal that changes in tax progressivity are due largely to macroeconomic and state fiscal conditions, such as unemployment, economic development, and budget deficits, although the organizational capacities of social classes and political conditions, such as labor organization and political participation, also have effects. Changes in progressivity are due primarily to adjustments in the rates paid by very high income families. However, the impacts of these conditions on tax progressivity changed somewhat when the federal income tax was transformed into a mass tax during World War IL Finally, political conditions have a relatively greater effect on the symbolic component of the income tax than on progressivity. Overall, this analysis supports a structural theory of the state in which the influences of politics and social classes on revenue extraction are circumscribed by macroeconomic and state fiscal conditions.

On the Degree of Property Tax Assessment Inequity in Complex Tax Jurisdictions

Abstract. The extent of interest in the degree of inequity in property assessment is indicative of the importance of identifying determinants of assessment inequity. Previous attempts to identify such determinants were certainly incomplete. An additional variable is offered for the list that would be expected to explain statistically the degree of inequity in the distribution of property tax liabilities, in general, and to examine specifically the relationship between assessment, inequity and the degree of complexity for assessing Jurisdictions. The latter are often complex in the sense that individual properties, although subject to a set of two or more nominal tax rates on assessed values, are not subject to the same set of nominal tax rates. It is argued—to the extent that individual property tax liabilities are capitalized in sale prices for individual properties—that the greater the number of specific property tax rates on assessed value, the greater is the expected frequency of change in such specific property tax rates and, therefore, the higher the expected value of the measure of the degree of inequity.

Property Tax Assessment Reform: A Source of Local Revenue Windfall or Fiscal Retrenchment

Abstract. Researchers, state officials and taxpayers have often speculated that property tax assessment reform would lead to an increase in the overall tax burden. They contend that, given the large non‐discretionary increase in the tax base during the reform, local governments can raise more resources without increasing the nominal tax rate. An empirical analysis of 74 towns in New York supports that position. However, two types of tax shifts that occurred in the wake of reassessment—interclass shifts of tax burden to the owners of residential propertieskovn the other property classes and intra‐class shifts observed among residential property owners—have caused significant moderation in this pattern of local government behavior. Therefore, tax reform, while it bestows revenue windfalls upon some local governments, may require fiscal retrenchment by others.

Residential Property Tax Capitalization: Consistent Estimates Using Micro-Level Data

Previous research on residential property tax capitalization has been dominated by models estimated with aggregate data. The property tax burden measure used in many of these aggregate studies is the effective tax rate, which accounts for differences in assessment ratios and nominal tax rates among taxing jurisdictions (Oates 1969; McMillan and Carlson 1977; Pollakowski 1973; Hyman and Pasour 1973). Other studies have touched on the advantages of individual property or micro-level data and have estimated residential property tax capitalization models based on such data (King 1973, p. 88; Edelstein 1974). These studies have not generally used the effective tax rate as the tax burden measure.1 A micro-level study that did use the effective tax rate measure of tax burden reported biased estimates of population parameters (Wales and Wiens 1974). In this article, we present a linear capitalization model for micro-level residential property data using the effective tax rate as the measure of tax burden, but estimated using an approach that yields estimates with desirable sample properties. A general specification of the model is:

Capital Transfer Tax: an Obituary

In the Budget of March 1981 the Chancellor made changes which will produce a dramatic reduction in the real burdens of most potential payers of Capital Transfer Tax (CTT). Even without sophisticated tax avoidance, over 99 per cent of wealth owners will now be able to pay zero CTT when they hand on their assets. The burden to be borne by most of the remaining one per cent has also been greatly reduced. The purpose of this note is not to explore either the reasons, or the choice of timing, for what is effectively the demise of CTT; nor to speculate about why generosity of what is in fact implied. Nor is this a repeat of the arguments for doubting the case put forward for treating agriculture in particular as a special case-see Sutherland (1980). Here is simply a history of CTT set out schematically in Table 1; and with calculations at successive dates of nominal and real tax rates in Tables 2-5. Comparisons with other OECD countries up to the late 1970s are to be found in OECD (1979).

Causes of Local Property Tax Discrimination

A unique feature of property taxation is that in most localities the officials responsible for assessments have the power to establish discriminatory effective tax rates. Although the nominal tax rate is applied uniformly to all properties, the ratio of assessed value to market value is determined by the assessment system, and to the extent that this ratio varies, so do effective tax rates.' In fact, assessment-to-market value ratios typically vary significantly within given tax jurisdictions causing distriminatory effective property tax rates.2 Moreover, studies have shown that within localities varation