Tax Burden Research Articles

Re-evaluating the Malaysian shadow economy: evidence from public expenditure patterns

Purpose While financial crime theory posits that systemic vulnerabilities in fiscal governance enable illicit enrichment, prior studies disproportionately attribute shadow economy (SE) growth to tax burdens. This study aims to re-evaluate Malaysia’s SE (1970–2022) through a financial crime lens, arguing that inflated public expenditure (PE) fosters institutionalized fraud, where officials exploit fiscal expenditures to obtain illicit incomes. Design/methodology/approach Using a modified Pickhardt−Pons currency demand approach (CDA), this study integrates Gregory-Hansen cointegration and autoregressive distributed lag bounds testing to quantify SE size amid structural breaks. Findings Results reveal SE averages 24.2% of gross domestic product (RM117.42bn), peaking during PE spikes related to infrastructure booms and opaque tendering processes. This aligns with institutional anomie theory, where Malaysia’s growth-centric bureaucracy diverting PE into informal networks. Unlike tax-centric models, the PE framework exposes how SE actors exploit lax oversight in high-spending environments to legitimize illicit flows. The findings counter traditional tax-burden narratives, showing that variability in SE are primarily driven by PE growth rather than by taxation. Originality/value This study reinterprets the SE in Malaysia by focusing on the misuse of public expenditure rather than tax evasion. Grounded in financial crime theory, it reveals how weak enforcement and political incentives contribute to the persistence of informal activities. The analysis shifts attention from traditional tax-based explanations to institutional vulnerabilities that enable financial misconduct. By highlighting these dynamics, the research offers valuable insights for policy reform. It supports anti-corruption strategies focused on improving transparency in public procurement and strengthening expenditure audits, rather than relying on tax increases to control SE growth.

Impact of tax administration efficiency on fiscal freedom across Asia: the moderating role of tax rate

ABSTRACT This study investigates the interplay between tax administration efficiency and fiscal freedom in Asian, emphasising the moderating influence of tax rates. Tax administration efficiency is evaluated through two metrics: tax preparation time and the number of taxes paid, while fiscal freedom is quantified using the fiscal freedom index. Employing panel data from 43 Asian countries spanning 2005–2019, the analysis reveals a significant negative relationship between tax preparation time, the number of taxes paid, and fiscal freedom. Furthermore, the interaction analysis demonstrates that tax rates exacerbate the adverse effects of tax preparation time and the tax burden on fiscal freedom. These findings underscore the critical need for tax reforms centred on digitalisation, administrative simplification, and the optimisation of tax rates to foster a more efficient and transparent tax system. The study provides valuable insights for policymakers in formulating fiscal strategies that enhance the investment climate, promote taxpayer compliance, and bolster economic competitiveness.

Importance of abatement technology for achieving sustainable development: a numerical investigation

In endogenous growth models that focus on and implement various aspects of the natural environment, it has been shown that environmental taxation often leads to corresponding improvements in economic conditions, including welfare, as well as environmental improvements. Nevertheless, it is easy to imagine that raising taxes for the purposes of environmental preservation could be a burden for private firms and, eventually, its impact would extend to individual households. This paper presents one possible proposal that would preserve the aforementioned benefits while maintaining a lower tax burden. Its relevance is demonstrated through an extended numerical analysis of an existing study that examines the development of abatement technologies in the framework of R&D-based growth. Specifically, we focus on trends in two economic variables, the rates of economic growth and economic welfare, and two environmental variables, pollution emission levels and environmental quality.

Applications of the Shapley Value to Financial Problems

Managing risk, matching resources efficiently, and ensuring fair allocation are fundamental challenges in both finance and decision-making processes. In many scenarios, participants contribute unequally to collective outcomes, raising the question of how to distribute costs, benefits, or opportunities in a justifiable and optimal manner. This paper applies the Shapley value—a solution concept from cooperative game theory—as a principled tool in the following two specific financial settings: first, in tax cooperation games; and second, in assignment markets. In tax cooperation games, we use the Shapley value to determine the equitable tax burden distribution among three firms, A, B, and C, which operate in two countries, Italy and Poland. Our model ensures that countries participating in coalitions face a lower degree of tax evasion compared to non-members, and that cooperating firms benefit from discounted tax liabilities. This structure incentivizes coalition formation and reveals the economic advantage of joint participation. In assignment markets, we use the Shapley value to find the optimal pairing in a four-buyers and four-sellers housing market. Our findings show that the Shapley value provides a rigorous framework for capturing the relative importance of participants in the coalition, leading to more balanced tax allocations and fairer market transactions. Our theoretical insights with computational techniques highlights the Shapley value’s effectiveness in addressing complex allocation challenges across financial management domains.

Research on Influence of Adjustment of Personal Income Tax Collection Ratio in Australia

This article investigated the impact of adjusting Australia's personal income tax rate on national economic stability, income distribution, and public service funding. This study evaluated the impact of modifying the personal income tax system, with a focus on its effects on taxpayer behavior, tax structure, and social stability. By analyzing economic changes and income and expenditure data, determine how adjusting income tax rates affects different economic groups in society. The research results indicate that increasing the tax burden on high-income groups can enhance social equity, but may lead to a decrease in consumer spending and investment in certain industries. On the contrary, reducing the overall personal income tax rate can stimulate economic activity, but may pose fiscal challenges to the funding of basic public services. This study emphasizes the need for a balanced approach that considers economic growth, fiscal responsibility, and fairness in tax distribution. Suggestions were made for future tax policy adjustments, emphasizing the importance of a progressive tax system that adapts to economic fluctuations and population changes.

The Constitutional and Legislative Basis for Considering the Taxable Capacity of Taxpayers in Iraqi Tax Legislation

Taxable capacity or tax ability represents the extent to which an individual’s income and wealth can bear the burden of taxes. Financial thought has emphasized the necessity of establishing the principle of tax justice among taxpayers in a manner that considers taxable capacity, where taxes are imposed at varying rates that increase with the taxpayer’s income and decrease as it declines. The concept of taxable capacity necessitates the application of certain principles, such as the exemption of the minimum amount necessary for living, consideration of the taxpayer's family burdens, differentiation in tax treatment based on the source of income and the principle of progressive tax rates. Since taxes are among the most significant sources of state revenue, they are generally imposed on all taxpayers. However, the application of the principles of justice, in general and tax justice, in particular, requires taking into account all personal circumstances surrounding taxpayers. The state’s role is not limited to obliging individuals to pay taxes; rather, it must also consider their taxable capacity and family circumstances. Accordingly, most tax legislations have sought to provide a degree of personal exemptions, referred to as "allowances," which are legally exempt from taxation.

“Impact of Taxation Policies on Small Businesses”

Abstract Taxation policies play a crucial role in shaping the business environment for small enterprises, influencing their growth, profitability, and compliance burden. Small businesses, which form the backbone of the economy, are particularly sensitive to changes in tax structures, as they often operate with limited financial and administrative resources. This study explores the impact of various taxation policies, including direct taxes such as income tax and corporate tax, as well as indirect taxes like the Goods and Services Tax (GST). It examines how tax regulations affect the financial health of small enterprises, their ability to compete in the market, and their long-term sustainability. The research also identifies key challenges faced by small businesses in tax compliance, such as high administrative costs, frequent policy changes, and digital adaptation issues. Through comparative analysis, the study evaluates taxation policies in India alongside global practices, highlighting best practices that can be adopted to create a more business-friendly tax environment. Additionally, case studies illustrate how tax incentives, exemptions, and simplified compliance measures can support small business growth. By providing a comprehensive understanding of taxation policies and their impact, this study offers insights into potential reforms that can reduce the tax burden on small enterprises while ensuring efficient revenue generation for the government. The findings emphasize the need for a balanced approach where taxation policies promote both economic development and regulatory compliance, allowing small businesses to thrive in an increasingly competitive landscape.

A importância do planejamento tributário no Brasil

This article addresses the importance of tax planning in Brazil, a country with a complex, unstable, and historically rigid tax system. The main objective is to explore the fundamental concepts, main strategies, and relevance of the correct application of tax planning for companies and individuals. The work uses a bibliographic research methodology in reliable sources such as legislation, case law, doctrine, and recent academic articles. Basic concepts such as taxes and their types are defined, in addition to addressing the difference between tax avoidance, evasion, and tax evasion. Several legal tax planning strategies are presented. The steps of successful tax planning are detailed, from the analysis of the current scenario to implementation and monitoring. The three types of tax planning are also explored: operational, strategic, and tactical. It is concluded that tax planning is an essential tool for financial management and business success in Brazil, providing a legal reduction in the tax burden.

State-Level Tax Policy, Cancer Screening, and Mortality Rates in the US

The Healthy People 2030 initiative has set national cancer screening targets for breast, colon, and cervical cancers, as well as aims for reducing cancer mortality. State-level tax policy is an underappreciated social determinant of health that may improve cancer screening and mortality rates. To define the association of tax revenue and tax progressivity with state-level cancer screening and mortality. This ecologic, population-based, cross-sectional study assessed cancer screening (2020 and 2022) and mortality rates (1999-2021) in the US relative to state-level tax revenue (1997-2019) and tax progressivity (2002, 2009, 2012, 2014, and 2018) with a 2-year lag. The study included 50 states through 23 years with state-years used as the unit of analysis. Cancer screening rates were derived from the Centers for Disease Control and Prevention (CDC) Population Level Analysis and Community Estimates database. State-level cancer-related death and population counts were derived from the CDC Wide-Ranging Online Data for Epidemiologic Research database. Data analysis occurred from September to January 2024. State-level tax policy was proxied by tax revenue per capita and the Suits index of tax progressivity, with progressive taxation equaling lower tax burden for more disadvantaged populations. Outcomes included screening rates for colon, breast, and cervical cancer, as well as mortality rates for all malignant neoplasms and malignant neoplasms with guideline-recommended screening. Multivariable models were adjusted for tax-related, socioeconomic, and demographic variables. In total, 1150 state-years were included in the analysis. Median (IQR) tax revenue per capita was $4432 ($3862-$5210), and the median (IQR) number of cancer-related deaths was 8341 (3150-13 585) across all state-years. Of note, each $1000 increase in tax revenue per capita was associated with a 1.61% (95% CI, 0.50%-2.73%) increase in colorectal cancer screening, 2.17% (95% CI, 1.39%-2.96%) increase in breast cancer screening, and 0.72% (95% CI, 0.34%-1.10%) increase in cervical cancer screening rate. For malignant neoplasms with guideline-recommended screening, each $1000 increase in tax revenue per capita was associated with a decreased cancer mortality rate among White (adjusted incidence rate ratio, 0.95, 95% CI, 0.93-0.98), but not racial and ethnic minority (adjusted incidence rate ratio, 0.99, 95% CI, 0.97-1.02) populations. In this cross-sectional study, tax policy was associated with increased state-level cancer screening rates, as well as decreased cancer mortality rates, which mostly benefited White populations, suggesting that state-level policies may contribute to bridging ongoing cancer care gaps.

Corporate Minimum Tax and the Elasticity of Taxable Income: Evidence from Administrative Tax Records

We examine business responses to a minimum tax (MT) that prescribed fixed floors on corporate tax liability while permitting MT credit carryforwards. Using 2010–2020 tax-return data on all Slovak corporations, we find that many companies immediately relocated from reporting zero taxable income toward bunching at the new floors. We infer the elasticity of taxable income (ETI) to be between 0.33 and 2.28 across value-added tax (VAT) and turnover categories, and quantify the marginal efficiency burden (MEB) of the corporation tax. Given limited extensive-margin responses, our evidence suggests the MT reduced the overall efficiency burden while raising additional tax revenue. (JEL D22, E62, H25, H32)

IMF TaxFit Model Methodology and User Guidebook

The TaxFit microsimulation model calculates the taxes payable and benefits receivable by hypothetical households across an expanding list of countries. It simulates personal income taxes and social security contributions for all adults in a household, as well as family benefits, social assistance, in-work benefits, and caregiver support. Users define household characteristics—such as gross income levels and family composition—to facilitate cross-country comparisons of tax burdens and benefit generosity. When microdata is available, it can be uploaded to generate diagnostic indicators that better reflect the population, assess the distributional effects of tax and benefit reforms, and estimate fiscal costs. This technical manual provides a detailed overview of the TaxFit model, explains its underlying assumptions, and offers guidance on using the Stata-based model and its associated online tool.

Macro Perspectives on Income Inequality

Inequality has become a defining challenge for modern economies and a central focus of economic research over the past two decades. I begin by revisiting the foundations of income measurement, showing that standard definitions — taxable income, factor income, and Haig-Simons income — suffer from important conceptual limitations. I contrast these income measures with the ideal notion of income from a welfare perspective — Hicksian income — which captures an individual’s ability to consume or save for future consumption. I then examine the drivers of rising top income inequality, with particular attention to the surge in entrepreneurial incomes. I highlight three key forces behind this phenomenon: higher returns on capital (technological factors), lower external financing costs (financial factors), and a lighter tax burden on business owners (fiscal factors).

Impact of SciTech – Finance integration policy implementation on SME innovation performance: Mediating effect of tax burden

Impact of SciTech – Finance integration policy implementation on SME innovation performance: Mediating effect of tax burden

PENGARUH UKURAN PERUSAHAAN, TINGKAT UTANG DAN BIAYA OPERASIONAL TERHADAP BEBAN PAJAK PENGHASILAN BADAN

This research aims to analyze and provide empirical evidence of the influence of company size, debt levels and operational costs on corporate income tax burden. This type of research is associative quantitative using secondary data in the form of annual financial reports of food and beverage sub-sector companies registered in Indonesia Stock Exchange (IDX). during the period 2019 to 2023. The sample selection procedure in this study used a purposive sampling method and obtained results from 18 companies that met the criteria. The variables used in this research are company size as the first independent variable, debt level as the second independent variable and operational costs as the third independent variable and corporate income tax burden as the dependent variable. The analysis technique used is panel data regression analysis using E- views 12 software. The results of this study state that company size and debt levels have a significant effect on the corporate income tax burden, operational costs have no effect on the corporate income tax burden.

TAXATION AUDIT, TAX CONTROL AND DUE DILIGENCE OF LARGE ENTERPRISES: STATE, TRENDS, DETERMINANTS OF DEVELOPMENT

The article is to substantiate the essence, divergences and determinants of the evolution of taxation audit, tax control and tax due diligence of large enterprises, and to develop proposals for their improvement. There was distinguished the essence of the concepts of "taxation audit" as a service provided by an audit firm, and the concept of "tax audit" as a form of tax control by the State Tax Service of Ukraine (STSU). A definition of a tax audit of a large taxpayer is proposed. It was determined that tax due diligence includes a study of the taxation system of an enterprise, assessment of significant tax risks, and optimisation of tax burden, and is carried out before mergers or acquisitions of companies’ capitals. It was defined that for the purposes of taxation audit, tax control and due diligence, the concepts of "large taxpayer" and "large enterprise" should be identified since the criteria for their recognition in economic and tax legislation are identical. An analysis of the statistical data showed an upward trend in detected cases of tax abuse in 2019-2023. The main share of violations is related to corporate income tax (42.5%), value-added tax (29.0%), and rent payment (13.5%), which increased during the martial law. The evolution of the dynamics of the volume of voluntary auditing services and taxation audits in 2019-2023 showed a negative trend towards its reduction, while the number of tax violations detected by government agencies increased. Taxation audit and tax due diligence are carried out voluntarily as a service provided by an audit firm, which combines both elements of an assurance engagement and elements of a consulting service. A conceptual model of taxation audit, tax control and due diligence of large enterprises was proposed, which will contribute to the growth of the services` quality and their synergy.

Pengaruh Good Corporate Governance (GCG), Corporate Social Responsibility (CSR), Profitabilitas, dan Sales Growth Terhadap Tax avoidance: Studi pada Perusahaan Manufaktur Sub Sektor Food and Beverage yang Terdaftar di Bursa Efek Indonesia Tahun 2021-2023

Tax avoidance is an effort mde by taxpayers to reduce the tax burden in a way that does not violate tax laws and regulations. This study aims to analyze the influence of Good Corporate Governance (GCG), Corporate Social Responsibility (CSR), profitability, and sales growth on tax avoidance in manufacturing companies in the food and beverage sub-sector listed on the Indonesia Stock Exchange during the 2021-2023 period. By using a quantitative approach and purposive sampling methods. The variables studied include tax avoidance measurement using Cash Effective Tax Rate (CETR), GCG with institutional ownership, audit committee, and independent board of commissioners, CSR measurement, and profitability measured by Return on Assets (ROA), and sales growth. The analysis was carried out through multiple linear regression and hypothesis testing. The results of the study show that the variables of the Board of Independent Commissioners, Profitability, and Sales Growth have an effect on Tax avoidance. Meanwhile, the variables of Institutional Ownership, Audit Committee, CSR have no effect on Tax avoidance.

The Flip and Flop of Taxing Alimony

Since the dawn of income taxation in America, the tax treatment of alimony payments has flipped, flopped, and flipped again. The tax burden was first borne by the person paying alimony, then by the person receiving it. The burden has since shifted back to the alimony payor. This, we argue, was a flop. The Tax Cuts and Jobs Act of 2017 eliminated a tax deduction for alimony payments that served to reduce the taxable income of the payor and shift the payments into the taxable income of the recipient. Congress justified this deviation from the longstanding deduction/income treatment based an old Supreme Court case that held alimony was to be taxed to husbands as part of their moral and legal obligations to support their wives. More likely, Congress was acting for its own benefit—eliminating the deduction is estimated to raise billions for the fisc. In this Article, we argue that this change was a mistake. Treating alimony payments as income to the recipient better comports with the Tax Code’s progressive rate structure and the concept of taxing a party based on “ability to pay.” The argument proceeds in two parts. First, we argue that alimony payments do not constitute consumption by the payor. Thus, like gifts, alimony payments should only be taxed to one of the parties involved in the transfer. Existing scholarship seems to coalesce on this point. Still, this does not tell us whom to tax: the alimony payor or the recipient? Distinguishing the income tax treatment of alimony from that of gifts, we argue the latter. As a theoretical matter, allowing a deduction for alimony payments aligns with our progressive rate structure by accounting for the payor’s lower marginal “ability to pay” after making alimony payments. These payments represent future consumption by the recipient, not the payor, and thus reflect an increase in the recipient’s “ability to pay” taxes on such sums. And, as a practical matter, allowing parties the flexibility to allocate the tax burden among themselves is a negotiating chip that may grease the wheels in other areas of the divorce settlement process. We recommend that Congress flip once more and return the tax treatment of alimony to what it was prior to the 2017 Act reform.

Synergy of Pancasila ethical principles and transfer pricing practices for economic sustainability

This study attempts to reconstruct the ethical principles of Pancasila with fair transfer pricing practices to create a set of guidelines that encourage economic sustainability in Indonesia, using a qualitative-critical approach. Data were obtained through in-depth interviews with tax authorities, tax consultants, and multinational companies, as well as document analysis using thematic techniques and NVivo 12 software. Findings suggest that although transfer pricing is legally permitted, the practice is often manipulated to suppress tax burdens, thereby reducing state revenues and exacerbating inequality. Integrating Pancasila values—such as fairness, transparency, and cooperation—into tax governance can encourage more ethical corporate behavior and strengthen regulatory compliance. The first, second, and fifth principles of Pancasila serve as important ethical foundations for regulating transfer pricing, promoting social justice, especially given the structural weaknesses in current regulations and enforcement. The study provides recommendations for strengthening the legal framework, increasing ethical awareness, and multilateral cooperation. Theoretically, it can enrich the literature by bridging local ethics and international tax policies, and provide practical implications for reforming transfer pricing governance that supports the country's fiscal resilience, social welfare, and sustainability.

The Factors Influencing Tax Management With Company Size As A Control Variable

This study aims to obtain empirical evidence on the factors that influence tax management with company size as a control variable. The population in this study are food and beverage sub-sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2021-2023 period. The sample of this study was obtained using a purposive sampling method, where only 36 food and beverage sub-sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) could meet all the criteria, so that 108 data were obtained which were used as research samples. The data sources in this study were obtained from secondary data sources, namely, sources or the official website of the Indonesia Stock Exchange www.idx.co.id. The analysis method used is the analysis of the panel data regression model test method. Based on the results of the tests conducted in this study, individually or based on (t-statistic test) it shows that deferred tax burden and profitability individually do not have a significant effect on tax management and capital intensity has a significant effect on tax management, meanwhile company size as a control variable individually does not have a significant effect on tax management.

The impact of green bonds on firm cost of capital, and market stability, a global analysis

Purpose This study aims to examine the impact of green bond issuance on firms’ cost of capital, market volatility and leverage levels, focusing on the financial benefits and stability associated with green bond issuance. Design/methodology/approach Utilizing a global data set of green bond issuances from 2012 to 2022, the study applies the Propensity Score Matching-Difference-in-Differences (PSM-DID) methodology to compare firms that issue green bonds with those that do not, isolating the effects of green bond issuance on financial metrics. Findings The study finds that firms issuing green bonds experience a significant reduction in their overall cost of capital, both short and long-term. Green bond issuance is linked to lower weighted average cost of capital (WACC) components, including debt costs, tax-adjusted WACC and reduced short-term and long-term debt expenses. These firms exhibit lower market risk, as indicated by lower beta values, signifying enhanced financial stability and reduced volatility. They also benefit from improved tax efficiencies and lower interest expenses, reducing their tax burdens. Practical implications The findings suggest that green bonds offer substantial financial advantages, including lower capital costs, reduced risk exposure and more excellent market stability while promoting sustainability. This offers valuable guidance for businesses, encouraging them to use green bonds to improve financial performance and support sustainability efforts. Originality/value To the best of the authors’ knowledge, this study is one of the first to examine the global impact of green bonds on the cost of capital, incorporating extended variables and a comprehensive data set to offer new insights into the financial and sustainability benefits of green bond issuance.