Liquidity concerns are oft raised when considering wealth taxes, yet the issue has received scant attention in the extant literature. In this paper we provide the first comprehensive review of the ...liquidity problem. Our aims are to estimate the scale of the problem, to explore the extent to which archetypal examples are at risk of experiencing low liquidity, and to review the policy options to reduce the scale and impact of liquidity challenges. Using data from Round 6 of the Wealth and Assets Survey, we demonstrate that the scale of the problem depends largely on conceptual and design issues. We find that farmers and business owners are commonly over‐represented in the low‐liquidity group, but there is little evidence to support the typical narrative surrounding single pensioners. Finally, we conclude our review with a number of preferred solutions to address liquidity issues, including recognising that a net wealth tax can be paid out of income or by sale of assets, by withholding tax (e.g. by pension providers), by borrowing/financing, deferred payment arrangements and, possibly in limited circumstances, payment in specie.
This paper uses the Business Environment and Enterprise Performance Survey data for the years 1999, 2002 and 2005 to investigate business tax evasion in 24 transition economies. We use both ...conventional fixed effects estimation and the recently developed Fixed Effect Vector Decomposition approach. The most robust finding in our study is the importance of institutional factors. In particular, higher levels of corruption related to tax administration and slower transition reforms substantially reduce the amount of taxes paid by businesses in transition economies. In addition, we find a positive relationship between evasion and tax rate; and identify minor effects of the macroeconomic environment. We also find that social norms play a significant role in tax evasion. These findings inform policy recommendations intended to reduce either the possibility and/or the inclination to evade.
The optimal design of low-income support is examined using a structural labour supply model. The approach incorporates unobserved heterogeneity, fixed costs of work, childcare costs and the detailed ...non-convexities of the tax and transfer system. The analysis considers purely Pareto improving reforms and also optimal design under social welfare functions with different degrees of inequality aversion. We explore the gains from tagging and also examine the case for the use of hours-contingent payments. Using the tax schedule for lone parents in the U.K. as our policy environment, the results point to a reformed non-linear tax schedule with tax credits only optimal for low earners. The results also suggest a welfare improving role for tagging according to child age and for hours-contingent payments, although the case for the latter is mitigated when hours cannot be monitored or recorded accurately by the tax authorities.
This article investigates whether market competition enhances the incentives of Chinese industrial firms to avoid corporate income tax. We estimate the effects of competition on the relationship ...between firms' reported accounting profits and their imputed profits based on the national income account. To cope with measurement errors and potential endogeneity, we use instrumental variables, exogenous policy shocks and other robustness analysis. We find robust and consistent evidence that firms in more competitive environments engage in more tax avoidance activities. Moreover, all else equal, firms in relatively disadvantageous positions demonstrate stronger incentives to avoid corporate income tax.
We link two cross-country datasets to analyse the relationship between individuals' patriotism and attitudes toward tax compliance. The datasets contain a number of variables that shape individuals' ...opportunities as well as expected benefits from tax evasion. We find a robust positive association between patriotism and tax compliance. The findings survive a variety of robustness checks, including an instrumental variables estimation to tackle the possible endogeneity of patriotism.
Exploiting the unique features of China's corporate income tax regime, which requires subsidiaries to submit their own taxes on a stand-alone basis, we examine the effect of intra-group geographic ...proximity on corporate tax avoidance. Based on a sample of 21,486 Chinese listed observations during the period from 2005 to 2019, we find a positive association between geographic proximity and tax avoidance. Mechanism tests show that geographically proximate firms engage in more related party transactions and that the positive association between geographic proximity and tax avoidance is significant only when the parent firm's statutory tax rate is the lowest of the group. We further find that parent firms' pre-tax earnings increase (decrease) with the propensity of income shifting into (out of) parent firms and that geographic proximity facilitates pre-tax earnings shifting both into and out of parent firms. Additional cross-sectional tests document that the positive effect of geographic proximity on tax avoidance becomes stronger when groups have stronger incentives or more capabilities to avoid taxes, and it becomes weaker when parent firms have other mechanisms to interact with subsidiaries than geographic proximity. Overall, we reveal whether and how intra-group geographic proximity affects corporate tax avoidance through income shifting.
•Our main results show that tax avoidance is positively related to geographic proximity.•Tax avoidance is achieved by pre-tax earnings being shifted from high-taxed to low-taxed members.•Geographic proximity facilitates both intra-group transactions and income shifting.•Firms' stronger incentive or capability to avoid taxes strengthens main results.•Introduction of substituting communication mechanisms between members weakens main results.
The costs of administering a wealth tax Burgherr, David
Fiscal studies,
September-December 2021, 2021-09-00, 20210901, Letnik:
42, Številka:
3-4
Journal Article
Recenzirano
Odprti dostop
I assess the costs of administering a wealth tax for taxpayers and the tax authority in the UK context, based on evidence from existing UK taxes on wealth and comprehensive wealth taxes that have ...been imposed in other countries. My central estimate is that a well‐designed wealth tax generates costs to taxpayers of 0.1 per cent of taxable wealth and costs to the tax authority of 0.05 per cent of taxable wealth. I discuss how these costs depend on design choices. My findings can inform revenue modelling and help to evaluate the desirability of wealth taxes.
Abstract
Sin or public health taxes are excise taxes imposed on the consumption of potentially harmful goods for health sugar-sweetened beverages (SSBs), tobacco, alcohol, among others, aiming to ...reduce consumption, raise additional revenue and/or improve population health. This paper assesses the extent to which sin taxes (a) can reduce consumption of potentially harmful goods, (b) raise revenue for national health systems and (c) contribute to population health in Latin America. A systematic literature review was conducted on peer-reviewed and grey literature; endpoints included: impact of raising sin taxes on consumption, ability to raise revenue for health and the possibility of population health improvements. Risk of bias for each study was assessed. The synthesis of the literature on sin tax implementation showed improvements in all three endpoints across the study countries. Following the introduction of sin taxes or by simulating their potential impact, nearly all studies explicitly reported that consumption of potentially harmful goods (mainly SSBs and tobacco) declined; revenue was found to have increased in almost all countries, suggesting that there may be additional scope for further tax increase. Simulated improvements in population health have also been shown, by demonstrating a relationship between sin tax increases and reduction in prevalence of diabetes, stroke, heart attacks and associated deaths. However, sin tax effects on health would be better quantified over the long-term. Data quality and availability challenges did place some limitations on sin tax impact assessment. Sin taxes can be effective in reducing consumption of potentially harmful goods, improve population health and generate additional revenue. Promoting further research on this topic should be a priority.
This paper demonstrates that the equilibrium impact of capital gains taxes reflects both the capitalization effect (i.e., capital gains taxes decrease demand) and the lock-in effect (i.e., capital ...gains taxes decrease supply). Depending on time periods and stock characteristics, either effect may dominate. Using the Taxpayer Relief Act of 1997 as our event, we find evidence supporting a dominant capitalization effect in the week following news that sharply increased the probability of a reduction in the capital gains tax rate and a dominant lock-in effect in the week after the rate reduction became effective.
PDF
