Personal Tax Research Articles

Do Personal Taxes Affect Investment Decisions and Stock Returns?

I study the causal effects of personal investment taxes on stock demand, stock returns, and the dividend policy of companies. I exploit a change in legislation in 2013 which allowed stocks listed on the Alternative Investment Market, a sub-market of the London Stock Exchange, to be held in a capital gains and dividend tax-exempt investment account for the first time. Using a difference-in-differences approach, I find that after the tax cut, stock demand increased, stock returns decreased, and dividends increased. I rationalize my results by introducing a life-cycle model which incorporates two risky assets with varying taxes. My results demonstrate the importance of personal taxes for both investors and companies.

НАЛОГООБЛОЖЕНИЕ САМОЗАНЯТЫХ ЛИЦ: ОСОБЕННОСТИ И ПЕРСПЕКТИВЫ ВНЕДРЕНИЯ

The article discusses the features of taxation of self-employed persons in the Russian Federation in connection with the adoption in 2018 of new legislation that allows individuals who are not registered as individual entrepreneurs to work in the legal field, but who receive income from the sale of goods, services and work. In addition, this type of tax can also be applied by individual entrepreneurs in compliance with all legal norms. It has been studied that the tax on professional income has its own features related to restrictions on application in terms of the volume of annual income received, the existence of labor relations, the types of activities carried out, and the combination with other special tax regimes. The advantages of the application related to a low tax burden, non-payment of mandatory fixed payments for mandatory pension provision and mandatory medical insurance are considered. Statistical studies of the quantitative characteristics of the application of the professional tax on the territory of Moscow and the Moscow region, as well as qualitative characteristics in the form of the formation of the revenue part of the budget of these subjects were conducted. It is revealed that citizens are actively included in the legal field, but the share of this tax in the total amount of tax revenues in the budgets of the subject is insignificant.

Dividend Taxes and Investment Efficiency: Evidence from the 2003 U.S. Personal Taxation Reform

Dividend Taxes and Investment Efficiency: Evidence from the 2003 U.S. Personal Taxation Reform

Personal Tax Planning: Getting a GRIP on New Passive Investment Rules and Integration

This article discusses integration in the Canadian tax system and describes how legislation originating from changes announced in the 2018 federal budget affects Canadian-controlled private corporations. The authors point out that refundable dividend tax on hand is now split into two pools, one for eligible refundable dividend tax on hand and one for non-eligible refundable dividend tax on hand. As well, the authors discuss two recent changes to the small business deduction rules: (1) the reduction of the small business deduction where passive investment income exceeds a specified limit and (2) the expanded application of the rules for sharing the small business limit among corporations within a corporate group.

DETERMINANT OF PERSONAL TAX COMPLIANCE IN INDONESIA

Purpose of the study: This article aims to analyze the effect of eight independent variables (happiness, level of welfare, electoral participation, sex, age, marital status, type of residence, and level education) on tax compliance in Indonesia. Methodology: The cross-sectional study data came from the 5th wave of the Indonesian Family Life Survey (IFLS 5) produced by Rand Corporation, Ltd, United States, in 2014-2015. The total sample of IFLS 5 reached 16,204 households and 50,418 individuals as household members. IFLS 5 respondents are household heads, spouses of heads household, and household members aged 15 years old or older who can provide information about the characteristics of household members. This article applies logistic regression using STATA 15 to analyze the IFLS 5. Main Findings: The result of logistic regression shows that of the eight independent variables identified as predictors of tax compliance (Y), only five independent variables (p<0.01) significant affect tax compliance (Y) with a contribution as much as 128.1% (electoral participation/X8), 61.1% (welfare/X2), 54% (happiness/X1), -37% (age/X3), 17.9% (education level/X7). Among these five independent variables, only the age (X3) has a negative relationship with tax compliance (Y), while the other independent variables have a positive relationship. This final model can explain tax compliance (Y) of 0.0275 or 3% significantly, X2 (5) = 459.46, p<0.01. Applications of this study: This article recommends that the government intervene in various sectors of social development, increase tax literacy, expand access to higher education, and improve the quality of the democratization process to increase tax compliance in Indonesia. Novelty/originality of this study: This article brings new evidence on the relationship between happiness, welfare, electoral participation, age, and education level on personal tax compliance.

The Impact of Financial Leverage on Shareholders’ Systematic Risk

This paper tests the degree to which a sustainable relationship exists between financial leverage and the systematic risk of shareholders under the following capital market imperfections: corporate and personal taxes as well as risky debt and bankruptcy costs. This beta-leverage relationship has not yet been examined empirically in prior studies nor compared with the theoretical parameter values implied by well-known formulations in the literature. Using data from publicly traded American industrial firms, we found that risky debt models, rather than their corresponding risk free debt models, are more sustainable and appropriate for describing the link between equity beta and financial leverage. Our findings imply that estimating betas or unlevering betas based on risk free debt models might lead to unsustainable and inaccurate estimates of key corporate parameters such as the cost of capital, and may consequently lead to inappropriate capital budgeting decisions. In this respect, the results of this study might have consequences to the recently growing area of sustainable finance in the sense that investment decisions made by different bodies and institutions in the country are more consistent with market imperfections that exist in the economy. In other words, our findings can be in line with a sustainable financial marketplace that contributes to the economic efficiency in the long run and can be related to social well-being.

Valuation, Personal Taxes, and Dividend Policy Under Passive Debt Management

We derive consistent valuation models in accordance with the flow to equity and adjusted present value approaches, which allow accounting for the firm’s dividend policy and passive debt management in light of differentiated personal taxes at the equity investor level. Specifi-cally, we establish appropriate adjustment formulas for the relationship between the firm’s unlevered and levered cost of equity, which are the basis for the unlevering and relevering of beta factors. Furthermore, using simulations, we show that dividend policy has a significantly positive effect on equity market value.

Paying for Progress: School Taxes, Municipal Government, and Liberal State Building, Cuetzalan and Huehuetla, Mexico, 1876–1930

Abstract Focusing on school funding, this article examines the relationship between the majority indigenous population of the Puebla Sierra and the Mexican state from 1876 to 1930. The article questions assumptions about peasant resistance to taxes and about the dearth of rural schooling before 1921. I find that the municipal personal taxes that funded education during the Porfiriato were raised continually in spite of the fact that they burdened the poor disproportionately. Acquiescence to taxation administered by local authorities was further demonstrated when personal taxes were abolished in 1917 and municipalities resuscitated a Porfirian-era education tax in order to maintain schools that state and federal governments would not pay for—a fact ignored by the historiography, which has focused on federal schools. This article argues that municipalities contributed to the emergent educational system and that school funding helped to construct an economically unequal liberal citizenship in which the price for inclusion could be high.

Rationalizing the Canadian Income Tax System

The Canadian tax system is based on principles informed by the Carter report, and these principles have been challenged as circumstances have changed and ideas about tax policy have evolved. The personal tax system pays only lip service to the comprehensive income tax ideal, and the corporate tax is designed as a complement to a comprehensive tax system that does not exist. Canadian policy makers face the unprecedented challenges of (1) globalization, (2) an economy increasingly based on services and technology, and (3) growing inequality of income, wealth, and opportunity. Modern principles of tax design are reflected in recent tax reform proposals recommended by the Mirrlees review in the United Kingdom. Major tax reforms have been undertaken in other member countries of the Organisation for Economic Co-operation and Development. Some piecemeal innovations in tax policy have been implemented in Canada, such as registered retirement savings plans, tax-free savings accounts, the goods and services tax/harmonized sales tax, and refundable tax credits, but these measures have not been coordinated. The corporate tax structure has changed only modestly. This paper explores options for feasible reform of the Canadian tax system that might enhance equity and efficiency.

Personal Tax Planning: Donation of Private Company Shares

This article explores planning opportunities related to charitable giving for individuals who hold shares in a family-owned private corporation. Specifically, the authors discuss ways of achieving philanthropic goals, as part of a tax-efficient estate plan, through an inter vivos donation of preferred shares that have been issued by a private corporation in connection with an estate freeze.

The asymmetric response of the economy to tax changes before and after 1980

This paper explores the asymmetry in the response of GDP to tax shocks before and after 1980 as first noted in Romer and Romer (2010). I find that there are two main reasons why output responds more strongly to tax shocks before 1980 than after. First, a greater sensitivity of the effect of tax shocks on output to the state of the economy before 1980 explains about half of the difference between periods. Second, before 1980 the effect of tax shocks on households is indirect and lowers total personal income and nondurable goods consumption. After 1980 tax shocks affect personal tax payments directly, causing disposable income and savings to change. This finding affirms Romer and Romer’s hypothesis that households are more likely to consumption smooth. However, I find that households after 1980 consumption smooth in response to a change in their direct tax burden not, as Romer and Romer posit, because they have greater access to financial services.

Distributional Impacts of State and Local Tax Policy in a Heterogeneous-agent Model

This article presents a dynamic heterogeneous-agent life-cycle model with housing demand to evaluate the economic implications of reforming US state and local personal tax structures. Because of the extensive reliance of state and local governments on income, sales, and property tax revenue, those three taxes are explicitly modeled to generate a baseline and varied to evaluate alternative policy proposals. The results of the model show that the sales tax burden falls evenly across the distribution of income earners, while the property tax burden falls more heavily on the highest income earners. By design, the model’s income tax is progressive, so the tax burden shares rise with income. Results also show that the property tax generally improves utilitarian social welfare relative to income and sales taxation, but the magnitude of these gains depends on the availability of a state and local tax deduction on federal income taxes.

Personal Financial Management and Taxation

Modern times are characterized by a high emphasis on consumerism and more of everything. Perhaps, such phenomenon represents, according to many the hyper-materialization of modern life which inevitably puts more pressure on our financial resources. Our children are demanding more in terms of clothing, activities, and various other possessions; while we are no longer content with 2 pairs of shoes but 1/2 dozen at least, to say the least. This means that we need to earn more to keep in line with our material requirements, or rather to keep consuming. In this article, we will discuss personal finance and their contributions. The purposes and strategies will be discussed here.

El consenso a la imposición en la fiscalidad global

El ámbito económico internacional de las naciones ha sufrido cambios acelerados desde el final del siglo XX hasta nuestros días. El aislacionismo económico característico de siglos anteriores al nuestro ha quedado en el pasado y, así, las instituciones internacionales adquieren protagonismo en lo que respecta a la toma de decisiones fiscales con repercusiones a nivel local.
 En un primer momento, el autor revisa y cuestiona los fundamentos democráticos sobre los que se sostiene la imposición fiscal de los organismos internacionales hacia los Estados nacionales en tiempos de la economía digital. El artículo revisa, asimismo, los conceptos de legitimidad y soft law, así como los principios de consenso a la imposición y reserva de ley. En un segundo momento, se examina el fenómeno de la elusión y evasión fiscal inevitablemente producido por las diferencias entre los varios sistemas fiscales y, consecuentemente, la centralidad estatal frente al impuesto personal como el mejor modelo de función redistributiva.

Executives’ Personal Tax Behavior and Corporate Tax Avoidance Consistency

We analyze executives’ (CEOs, CFOs, and Board Chairpersons) personal tax returns to investigate whether and how their personal tax behavior is associated with the tax avoidance of their firms. We develop various measures of executives’ personal tax behavior that are related to their personal risk propensity, ethics, financial incentives, and awareness of tax planning opportunities and risks. Our empirical results show that CEOs’ and CFOs’ personal tax behavior is related both to nonconforming and conforming corporate tax avoidance. We find no such results for Board Chairpersons.

The Effect of Accounting Information System and Tax Socialization on the Compliance of Personal Tax Reporting (Survey at PT. Belindo International Carpet)

With the existence of an Accounting Information System, individuals / organizations can easily make a report that will be useful in taking various decisions based on the available financial information. Tax is a very important role in the life of the state. Tax from the community is the main source of funding for the government of the Republic of Indonesia in financing development. In order to support the increase in state revenues through taxes, the government carried out a reform in the tax sector, namely the change from the Official Assessment System to the Self Assessment System, namely by applying such e-TIN, e-SPT, and e-filing. . With E-filling, it is expected that the community can comfortably and easily fill out and submit a Taxpayer Notification Letter report online, it can be done anywhere and anytime. With the ease and flexibility of this system, it is expected to increase taxpayer compliance to report the tax. K eywords: Accounting Information System, Tax Socialization and Compliance Of Personal DOI : 10.7176/EJBM/11-24-08 Publication date : August 31 st 2019

Local Taxes and the Demand for Skilled Labor: Evidence from 27 Million Job Postings

Using big data on U.S. job postings, we document detrimental effects of local personal income taxes on the level of education, experience, and technological skills required by firms when hiring workers (downskilling). Tax-induced downskilling is identified at the county level and at individual firms' establishments. It is driven by taxes on middle-class earners. Multi-state corporations internally reassign their hiring of low- vs. high-skill workers according to local personal tax changes. Together with worker downskilling, firms cut IT investment in localities that hike personal taxes. Our results suggest that corporations amplify the ``brain drain'' effect induced by local personal income taxes.

납세자의 개인납세윤리, 사회납세윤리, 사회정체성 및 세무조사가능성이 납세순응에 미치는 영향

납세자의 개인납세윤리, 사회납세윤리, 사회정체성 및 세무조사가능성이 납세순응에 미치는 영향

The Effect of Knowledge and Understanding Taxation, Quality of Tax Services, and Tax Awareness on Personal Tax Compliance

The purpose of this study is to find out a significant influence between Knowledge and Understanding of Taxation, Tax Service Quality, and Tax Awareness on the Compliance of Individual Taxpayers registered at the KPP of Jakarta Penjaringan. The research method used is multiple regression analysis. The data used are primary data; a sample is determined by convenience sampling method, data collected using a questionnaire. Respondents in this study amounted to 100 people. The results of this study are knowledge and understanding of taxation, tax service quality, and tax awareness have a significant positive effect on the compliance of individual taxpayers. This study also proves that tax awareness, knowledge, and understanding of taxation, and tax service quality are jointly influential towards individual taxpayer compliance.

“Please give me an invoice”: VAT evasion and the Portuguese tax lottery

PurposeThe Portuguese tax authority implemented a lottery to encourage citizens to request invoices as a strategy to fight value-added tax (VAT) evasion. As the law does not require citizens to request sales invoices with the consumers’ tax number, doing so is a form of voluntary cooperation in tracking down tax evaders. The purpose of this paper is to understand why ordinary citizens decide to join forces with tax authorities in the fight against VAT evasion by requesting invoices with their tax identification number.Design/methodology/approachAn empirical study was conducted to explore the underlying motivation for Portuguese consumers to request sales invoices with their personal tax identification. The study combines quantitative and qualitative data.FindingsThe results from this study show that rewarding citizens is clearly a factor to be considered in any policy to maximize citizens’ cooperation in tracking down tax evaders. They indicate that fiscal benefits have a stronger effect on the request of invoices than the lottery and that it is necessary to promote good governance and justice.Practical implicationsFindings should be used to inform a cost-effective public policy that takes into account citizens’ concerns and combine deterrent measures and rewards in the form of tax benefits, rather than tax lotteries.Originality/valueThis paper provides new insights into VAT lotteries, which seem to be increasingly favored by policy makers but are an area under-researched. By recommending a course of action to maximize citizens’ cooperation in tracking down tax evaders, the paper provides useful practical implications and is a contribution for the study of VAT evasion policies.