•Higher social security contributions lead companies to lean more towards labor outsourcing decisions.•This effect is more pronounced in non-state-owned enterprises.•This effect is more pronounced in ...manufacturing industry samples.
This paper empirically examines the relationship between the pressure of social security contributions and employment decisions regarding labor outsourcing among non-financial, non-insurance listed companies in China's capital market, under the country's unique institutional background. The findings indicate that higher social security contributions lead companies to lean more towards labor outsourcing decisions. Heterogeneity analysis shows that the positive impact of social security contributions on the inclination for labor outsourcing is primarily found in non-state-owned enterprises and manufacturing industry samples.
We use harmonized survey data from the Luxembourg Income Study to assess the redistributive impact of taxes and transfers across 22 OECD countries over the 1999–2016 period. After imputing missing ...tax data (employer social‐security contributions), we measure the reduction in income inequality from four key levers of tax and transfer systems: the average tax rate, tax progressivity, the average transfer rate, and transfer targeting. Our methodological improvements produce the following results. First, tax redistribution dominates transfer redistribution (excluding pensions) in most countries. Second, targeting explains very little of the cross‐country variation in inequality reduction. In contrast, both tax progressivity and the average tax rate have large impacts on redistribution. Last, there seem to be political tradeoffs: high average tax rates are not found together with highly progressive tax systems.
E-commerce and labour tax avoidance Argilés-Bosch, Josep Mª; Ravenda, Diego; Garcia-Blandón, Josep
Critical perspectives on accounting,
December 2021, 2021-12-00, Volume:
81
Journal Article
Peer reviewed
Open access
•This paper investigates how the e-commerce influences labour tax avoidance (LTVA).•The study is based on a sample of French e-commerce and traditional retail firms.•LTAV is significantly higher in ...e-commerce than in traditional firms.•The digital economy disrupts the traditional employment relationships.•This behaviour conveys a negative effect for the whole society.•More regulation is needed for the employment agreements in the digital economy.
This study evidences one of the adverse effects of e-commerce on labour tax avoidance, and more precisely in the loss of firms’ social security contributions. With a sample of French e-commerce and traditional retail firms, we find that labour tax avoidance is significantly higher in e-commerce than in traditional retail firms. Results are robust to all measures of labour tax avoidance used in this study, to different estimation methods, sample selection criteria and sensitivity analyses. We discuss and conclude on the adverse effects of the digital economy and e-commerce on employees’ welfare and social well-being.
This paper investigates the effects of processing export on firms’ social security contributions. A consistent pattern emerges that processing exporters in China exhibit higher actual contributions ...relative to ordinary exporters. This finding is intriguing, as processing exporters have been found to be inferior on various margins, such as wages and productivity. We propose and test a potential mechanism from a labor standard perspective, supply chain pressure, where processing exporters are compelled by downstream importers to adhere to certain codes of conduct in order to avoid reputation damages. We discuss endogeneity problems arising from various sources that may affect the validity of the proposed mechanism, and adopt instrumental variable estimation to address any unobserved concerns. Moreover, despite the unquantifiability of supply chain pressure, supportive evidence is found as pure-assemblers, processing exporters in high-exposure industries, those with destinations in developed countries and those in export-intensive regions exhibit relatively higher contributions, as predicted by the theory. These findings also negate competing hypotheses from the traditional labor cost perspective. Furthermore, non-state-owned, small, and low-paying firms are more susceptible to supply chain pressure than their respective counterparts. Our findings contribute to a better understanding of the behavioral differences between processing and ordinary exporters.
•We study the effects of the CSLTB policy on corporate social security contributions.•The CSLTB policy significantly decreases corporate social security contributions through the liquidity ...constraints channel.•The effects of the CSLTB are concentrated in firms with tighter financial constraints, lower tax compliance and those located in cities with greater fiscal pressure.
Using the policy of the Consolidation of the State and Local Tax Bureaus (CSLTB) in China as a quasi-natural experiment, we investigate whether and how tax authority enforcement affects corporate social security contributions. The Difference-in-Differences (DiD) estimate shows that corporate social security contributions decline with an increase in tax authority enforcement. Further, we find that this effect is more pronounced for firms with tighter financial constraints, lower tax compliance and those located in cities with greater fiscal pressure. Mechanism tests show that tax authority enforcement leads to increasing in the effective income tax rate and financial risk but decreasing in operating profit. Overall, our findings suggest that tougher tax authority enforcement engenders a negative effect on corporate social security contributions by strengthening liquidity constraints.
The aging of society is one of the most important trends shaping the social, economic and political life of the 21st century. However, with the increasing number of people of retirement age, the ...problem of ensuring adequate conditions for a longer life arises. The state influences these conditions through the pension security system, including taxation of pensions. The paper attempts to answer the question whether taxation of remunerations and public pension benefits may have a significant impact on making decisions about choosing a country of work in the common market. For this purpose, Member States have been ranked in terms of two dimensions—the conditions of taxation of wages and the conditions of taxation of retirement benefits. The countries were classified using a multi-criteria comparative analysis and the agglomeration method. The study shows that taxing salaries and pension benefits is of marginal importance from the point of view of an employee’s decision-making. The main factors are the average expenditure on net salaries and the average expenditure on net pension benefits.
Abstract This study expands on the scope of firms' social responsibility and analyzes the relationship between Environmental Social Governance (ESG) and a commonly neglected aspect of Corporate ...Social Responsibility (CSR), which is tax payment – specifically, the payment of labor taxes. To test the research hypothesis, this study utilizes ESG data from Refinitiv Eikon and consolidated accounting data collected from Sistemas de Análisis de Balances Ibéricos (SABI) and applies panel data estimation. The regression results indicate that CSR has a negative and significant relationship with Labor Tax Avoidance (LTAV). This negative relationship remains robust and significant across different estimation methods and measures of CSR and LTAV. Our research suggests that managerial and practical concerns regarding social responsibility awareness are related to firms' decisions, impacting both society and employees, particularly concerning the avoidance of labor taxes.
We investigate business cycle dynamics of social security contributions (SSC), by far the largest labor tax distortion in the OECD. In most countries, we find a negative covariation of SSC tax ...burdens with levels and growth of GDP at business cycle frequencies and lower. In detrended data, a decline of GDP of 1% is associated with a 0.05-0.2 percentage point increase in the aggregate SSC burden, measured as a fraction of the wage bill. For most countries, average marginal SSC rates exceed, but track average rates. Changes in average SSC tax burdens are largely due to adjustments in statutory tax schedules rather than cyclical shifts in earnings distributions. Our findings are consistent with Esping-Andersen's (1990) typology of social welfare states. In some countries, SSC rates co-move with measures of the “labor wedge” (Chari et al. 2007, Brinca et al. 2016).
Social security contributions paid by firms were massively reduced in January 2016. We employ a state-of-the-art DSGE model to assess the effects of this measure on output, private consumption, and ...other key macroeconomic variables. We find that it significantly boosts GDP and consumption while reducing inflation and that these effects are sizable both in the short-term and in the long-term. We also report that the short-term impact is significantly stronger under an inflation targeting regime than under exchange rate stabilization.
Payroll taxes are usually designed to fund social insurance and not to contribute directly to redistribution. Over the last fifty years, France has modified dramatically the schedule of payroll ...taxation, turning it into the most progressive part of its tax system. Using administrative data and detailed microsimulation model of labor income taxation, we show that pretax wage (or labor cost) inequality measured by the P90/P10 ratio has increased by 15.4%, while net wage inequality has actually decreased by 18.9% over the 1967–2019 period. This reduction in wage inequality can be largely attributed to the policy mix of reductions of employer payroll taxes for low wage earners joined with minimum wage increases. We discuss whether this unusual French experiment carries lessons for other countries.
•Net wage inequality has decreased by 19% in France between 1967 and 2019.•This trend contrasts with those observed in most other developed countries.•However, pretax wage inequality has increased by 15%, like in other countries.•This is jointly explained by payroll tax reforms and increases in the minimum wage.•Payroll taxation has become, in France, the main redistributive tool among workers.
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