We quantify how sensitive is migration by star scientists to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal ...and corporate taxes on star scientists' migration patterns. The long-run elasticity of mobility relative to taxes is 1.8 for personal income taxes, 1.9 for state corporate income tax, and — 1.7 for the investment tax credit. While there are many other factors that drive when innovative individuals and innovative companies decide to locate, there are enough firms and workers on the margin that state taxes matter.
This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between changes in personal and corporate income taxes and develop a new narrative account of federal ...tax liability changes in these two tax components. We develop an estimator which uses narratively identified tax changes as proxies for structural tax shocks and apply it to quarterly post-WWII data. We find that short run output effects of tax shocks are large and that it is important to distinguish between different types of taxes when considering their impact on the labor market and on expenditure components.
This paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data. First, we provide a theoretical ...framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis. We discuss what other parameters should be estimated when the elasticity is not a sufficient statistic. Second, we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the United States to illustrate those issues. Third, we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out. Finally, we discuss avenues for future research.
This paper provides estimates of federal tax rates by income groups in the United States since 1960, with special emphasis on very top income groups. We include individual and corporate income taxes, ...payroll taxes, and estate and gift taxes. The progressivity of the U.S. federal tax system at the top of the income distribution has declined dramatically since the 1960s. This dramatic drop in progressivity is due primarily to a drop in corporate taxes and in estate and gift taxes combined with a sharp change in the composition of top incomes away from capital income and toward labor income. The sharp drop in statutory top marginal individual income tax rates has contributed only moderately to the decline in tax progressivity. International comparisons confirm that is it critical to take into account other taxes than the individual income tax to properly assess the extent of overall tax progressivity, both for time trends and for cross-country comparisons. The pattern for the United Kingdom is similar to the U.S. pattern. France had less progressive taxes than the United States or the United Kingdom in 1970 but has experienced an increase in tax progressivity and has now a more progressive tax system than the United States or the United Kingdom.
Purpose: This paper aims to verify whether the management of taxable income through aggressive tax practices negatively impacts the accuracy of market analysts' forecasts. Originality/value: The ...central contribution of this study is to relate tax aggressiveness with more significant errors in analysts' forecasts. Thus, the relevance of this paper is in showing that this practice can lead to a greater perception of companies' risks and more significant informational asymmetry, in addition to influencing stock prices and resulting in lower analyst accuracy. Design/methodology/approach: This research paper was developed from regression models with panel data with random effects, also using estimators based on instrumental variables with the application of Jensen's test to verify the validity of the generalized method of moments (GMM) estimation. The data were treated with the winsorization technique at the 1% level. Findings: A sample of companies listed on the B3 between 2010 and 2017 (with a total of 2,805 valid observations) showed that companies with higher tax aggressiveness are subject to a higher analyst forecast error. Thus, it is inferred that, for more aggressive companies, the degree of analyst predictability decreases. With this drop in the quality of analysts' forecasts, the users of their forecasts and reports are more vulnerable to informational asymmetry. Keywords: tax aggressiveness, analyst forecasting, results management, accuracy, bias Objetivo: O presente trabalho se propos a verificar se o gerenciamento do lucro tributavel por meio de praticas de agressividade tributaria gera um impacto negativo na acuracia das previsoes dos analistas de mercado. Originalidade/valor: A contribuicao central deste estudo e a de relacionar a agressividade tributaria com maiores erros nas previsoes dos analistas. Com isso, a relevAncia deste estudo esta em evidenciar que essa pratica pode levar a uma maior percepcao dos riscos das companhias e maior assimetria informacional, alem de influenciar os precos das acoes e acarretar menor acuracia dos analistas. Design/metodologia/abordagem: Esta pesquisa foi desenvolvida a partir de modelos de regressoes com dados em painel com efeitos aleatorios. Tambem foram utilizados estimadores baseados em variaveis instrumentais com a aplicacao do teste de Jensen para verificacao da validade da estimacao pelo metodo de momentos generalizado (generalized method of moments--GMM). Os dados foram tratados com a tecnica de winsorizacao ao nivel de 1%. Resultados: A partir de uma amostra composta por empresas listadas na B3 entre 2010 e 2017 (com um total de 2.805 observacoes validas), os resultados mostraram que as empresas que apresentam maior agressividade tributaria estao sujeitas a um maior erro de previsao dos analistas. Assim, infere-se que, para as empresas mais agressivas, o grau de previsibilidade dos analistas diminui. Com essa queda na qualidade da previsao dos analistas, os usuarios de suas previsoes e relatorios tornam-se mais vulneraveis a assimetria informacional. Palavras-chave: agressividade tributaria, previsao de analistas, gerenciamento de resultados, acuracia, vies
ABSTRACT
We examine the relation between managers' personal income tax rates and their corporate investment decisions. Using plausibly exogenous variation in federal and state tax rates, we find a ...positive relation between managers' personal tax rates and their corporate risk-taking. Moreover—and consistent with our theoretical predictions—we find that this relation is stronger among firms with investment opportunities that have a relatively high rate of return per unit of risk, and stronger among CEOs who have a relatively low marginal disutility of risk. Importantly, our results are unique to senior managers' tax rates––we do not find similar relations for middle-income tax rates. Collectively, our findings provide evidence that managers' personal income taxes influence their corporate risk-taking decisions.
JEL Classifications: G30; G32; G38; H24; H32.
Data Availability: Data are available from the sources cited in the text. Data on manager tax rates used in this paper are available at: http://acct.wharton.upenn.edu/∼dtayl/.
As rents have risen and wages have not kept pace, housing affordability in the United States has declined over the last 15 years, impacting the housing and living arrangements of low-income families. ...Housing subsidies improve the housing situations of low-income families, but less than one in four eligible families receive a voucher. In this article, we analyze whether one of the largest anti-poverty programs in the United States—the Earned Income Tax Credit (EITC)—affects the housing (eviction, homelessness, and affordability) and living arrangements (doubling up, number of people in the household, and crowding) of low-income families. Using the Current Population Survey, the American Community Survey/decennial census, and the Fragile Families and Child Wellbeing Study, we employ a parameterized difference-in-differences strategy to examine whether policy-induced expansions to the EITC affect the housing and living arrangements of single mothers. Results suggest that a $1,000 increase in the EITC improves housing by reducing housing cost burdens, but it has no effect on eviction or homelessness. Increases in the EITC also reduce doubling up (living with additional, nonnuclear family adults)—in particular, doubling up in someone else's home—and reduce three-generation/multigenerational coresidence, suggesting that mothers have a preference to live independently. We find weak evidence for a reduction in overall household size, yet the EITC does reduce household crowding. Although the EITC is not an explicit housing policy, expansions to the EITC are generally linked with improved housing outcomes for single mothers and their children.
Objectives:
Policies that increase household income, such as the earned income tax credit (EITC), have shown reductions on risk factors for child maltreatment (ie, poverty, maternal stress, ...depression), but evidence is lacking on whether the EITC actually reduces child maltreatment. We examined whether states’ EITCs are associated with state rates of hospital admissions for abusive head trauma among children aged <2 years.
Methods:
We conducted difference-in-difference analyses (ie, pre- and postdifferences in intervention vs control groups) of annual rates of states’ hospital admissions attributed to abusive head trauma among children aged <2 years (ie, using aggregate data). We conducted analyses in 14 states with, and 13 states without, an EITC from 1995 to 2013, differentiating refundable EITCs (ie, tax filer gets money even if taxes are not owed) from nonrefundable EITCs (ie, tax filer gets credit only for any tax owed), controlling for state rates of child poverty, unemployment, high school graduation, and percentage of non-Latino white people.
Results:
A refundable EITC was associated with a decrease of 3.1 abusive head trauma admissions per 100 000 population in children aged <2 years after controlling for confounders (P = .08), but a nonrefundable EITC was not associated with a decrease (P = .49). Tax refunds ranged from $108 to $1014 and $165 to $1648 for a single parent working full-time at minimum wage with 1 child or 2 children, respectively.
Conclusions:
Our findings with others suggest that policies such as the EITC that increase household income may prevent serious abusive head trauma.
This study identifies factors that may have influenced the degree of aggregate federal personal income tax evasion in the U.S. An established tax evasion model is updated to include the most recent ...data available and augmented with the addition of heretofore neglected or overlooked explanatory variables. To measure the degree of aggregate tax evasion behaviour, we adopt the percentage of personal taxable income that was unreported to the IRS by using official time series data for the years 1980 through 2016. We incorporate previously resilient variables such as the federal tax rate, the unemployment rate, the audit rate of filed returns by IRS personnel, the penalty interest rate on detected tax evasion, and a measure of real income growth into our study. Each has a statistically significant impact on the degree of aggregate federal personal income tax evasion, consistent with prior literature. As an extension of the literature, we find compelling evidence that age, gender, the average effective state income tax rate, and the percentages of federal personal income tax returns that include Schedule C and/or Schedule A are additional variables that have been largely ignored in previous related studies but appear to have impacted tax evasion behaviour.
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