TABLE 7 - available via license: Creative Commons Attribution 4.0 International
Content may be subject to copyright.
Source publication
This paper provides novel evidence on the multi-factor Effective Marginal Tax Rates (EMTRs) for a sample of 17 OECD countries and 11 manufacturing sectors. We use a single framework encompassing capital, labour and energy taxes. Our cross-country/cross-sector approach allows us analysing the contributions of these input factors to the effective tax...
Similar publications
We revisit the standard theoretical model of tax competition to consider imperfect mobility of both capital and labor. We show that the mobility of one factor affects the taxation of both factors and that the ”race-to-the-bottom” narrative (with burden shifting) applies essentially to capital-exporting countries. We validate our predictions using a...
Pillar One and Pillar Two would introduce new rules for the taxation of multinational enterprises (MNEs). This paper assesses the impact of these proposals on MNEs’ investment costs. The analytical framework extends the forward-looking effective tax rates (ETR) model of Devereux and Griffith (International Tax and Public Finance 10: 107–126, 2003)...
The aim of the article is to provide a complex analysis of labour taxation impact on economic growth in OECD countries. As main approximators of taxation, implicit tax rates and the World Tax Index are used. Methods and tests of dynamic panel regression with the Arellano-Bond estimator are used from the methodological point of view. From the result...
Tax reforms concerning corporate profit are an inevitable phenomenon in the 21st century with the unfair tax competition among countries going rampant. Although not a member of the European Union, Switzerland is affected by these measures, since it is one of the leading economies in the world which profits the most from preferential tax regimes. Fo...
It is widely recognized that international corporate taxation holds a distributional bias toward advanced economies and that developing countries only play a marginal role in tax governance-making. Yet, it is the ambition of both the G20 and the Organisation for Economic Co-operation and Development (OECD) to integrate developing countries in the B...
Citations
... In [17], they propose a unified approach to the assessment of the marginal effective tax rate, which is used by OECD specialists. The authors of the study [18] include labor taxes and indirect taxes in the assessment of the marginal effective tax rate and examine the influence of the presence of monopoly power on the determination of the marginal effective tax rate. ...
Lak of investments in fixed assets which stimulate economic growth is one of the problems of the modern Russian economy. According to the main hypothesis of the research, that corporate profit taxation decreases companies’ investment level, we aimed to assess the level of impact of profit taxation on investments in fixed assets. To test the hypothesis, we estimate the empirical investment equation, using the indicator of tax burden as one of the factors affecting investment. The theoretical basis of the research is the neoclassical cash-flow model. The marginal effective tax rate (METR) was used as an indicator of the tax burden. The empirical equation was estimated using a random effects model on the panel microdata, which includes financial statistics of 4,000 Russian companies for the period 2014–2018. The sample companies represent 78 regions of Russia and about 50 types of economic activity. We assumed heterogeneous effect of profit taxation and estimated the model separately for each of the three groups of companies differing in the degree of financial constraints. According to the results obtained, for the entire sample, for the entire period under review, we observe a negative impact of the marginal effective rate on the level of investment, significant at the 1% level. In aggregate, if the marginal effective tax rate falls by 1 percentage point, the investment level will increase by 0.05 percentage points. We obtained the following main results: profit taxation has a significant negative effect on the level of investment for companies that are not financially constrained, and the effect is not observed for financially constrained companies; younger companies are more sensitive to changes in profit taxation. However, general sensitivity of investment to profit taxation is quite modest.
... The European vector of the Republic of Moldova directs the reform efforts, related to the entire economic system, as well as to the fiscal one, in order to connect to the European standards, outlining new approaches to contemporary taxation (Hallett and Hougaard, 2016). These aspects give the chosen research topic a current context, which is to be capitalized later in practical terms, but also theoretically, through new scientific investigations, a consequence of the complexity of the fiscal issue (Salvador et al., 2014). ...
The topicality of the topic lies in the importance of taxation and reforms in this field for the economic development of any state. For the EU, as a conglomeration of states and as an exponent of economic globalization, taxation has a strong influence on the multiple economic processes that take place within this structure, as well as within each member state. Undoubtedly, from the perspective of the possible association with the European Union, for the Republic of Moldova, the fiscal changes with subsequent impact on the socio-economic development have a special importance. However, Community tax policy is difficult to impose in the European area, especially because of the obstacles it faces, especially those caused by the Member States themselves, which are reluctant to apply common rules, in particular to the elimination of various forms of tax discrimination, double taxation or tax evasion. The main tools that the European Union intends to use to bring Member States’ taxation closer together are tax harmonization and tax cooperation between Member States.
... SeeBarrios et al. (2018b) for cross-country and industry-level evidence on the role of mark-ups and behavioural responses to determine the direction and level of tax incidence. ...
The growth impact of tax reforms is probably one of the most controversial issues in economic policy discussions, reflecting deep beliefs in the way economic agents are expected to react to policy changes. The optimal tax theory literature provides a wide array of arguments to identify the mechanisms through which tax reforms might influence growth, depending on the tax category considered and the circumstances under which tax reforms are implemented. The empirical literature has relied on the use of cross-country growth regressions and provided general results leading to normative conclusions on the desirability of specific tax reform options. However, recent research has shown that this approach yields inconclusive results, notably due to identification and endogeneity issues, and the difficulty to account for the true determinants of governments' actions. The dynamic scoring approach combining microsimulation and macro models proves more useful in this respect, especially in order to draw policy recommendations while accounting for the second-round effects of tax reforms. I illustrate these arguments by analysing the growth impact of a hypothetical change from the current flat personal income tax (PIT) rates to progressive taxes in Central and Eastern European (CEE) countries. I find that the estimated impact of such a reform would be rather small but positive when using the dynamic scoring method, while the less-reliable traditional growth regressions would suggest adverse growth effects.
... Arachi and Biagi (2005), Hanlon and Heitzman (2010), Feld and Heckemeyer (2011) examined the impact of differences in tax rates on investment decisions when investing capital in another country. According to Barrios et al. (2014), countries with lower actual corporate tax burdens will be more attractive to investors. Attracting more businesses should translate into an increase in tax revenue. ...
... Institutional features of the national tax codes and international interaction between them leads to emergence of complex financial instruments, determines the need for their unification, harmonization, as well as the international tax planning. In the OECD countries, the unified structure of the tax system, which includes taxes for capital, labor and energy is used (Barrios et al. 2018). Assessment of their tax security is carried out using the generally accessible information regarding the most important indicators of the effectiveness of tax policy of a state (Afanasyeva et al.2016). ...
The theoretical and methodological principles of researching the tax security of a state were substantiated with the emphasis placed on the two basic economic theories: the social choice theory and the reflectivity theory. The differential features of national tax systems under globalization conditions and their impact on the economic security of the countries that differ in the political regime, the level of economic development, geography and location were identified. There was given the assessment of the cross-sector approach, based on which multifactor effective marginal tax rates in the European Union (EU) are calculated, and of the marginal approach to taxation in general. The analytical study of tax security of the countries of Organization of economic cooperation and development (OECD) was carried out based on the assessment of the specific weight of taxes in gross domestic product, as well as the structure of taxes in the context of taxation objects: income individuals, income corporates, social security contributions, property, value added taxes, other consumption taxes. A particular attention is attached to the problems of taxation of the motion of capital and goods between the EU countries within the framework of ensuring the mutual economic benefits of the collective interests. The assessment of external and internal threats to tax security of Ukraine was performed based on the identification of the shadow economy segment, reasons for its emergence and consequences for the national economy, as well as the dynamics of the absolute and relative indicators of the budget-debt security. The recommendations on strengthening the tax security of Ukraine under the European integration conditions were given.
... Even though the legislation sets the basic (in some countries a reduced tax rate too), which is the same for all companies, it is necessary to monitor the tax burden in a wider perspective. It is precisely the inappropriateness of using statutory rates as an objective indicator in tracking and then comparing the corporate tax rate to deriving an effective tax rate that has a significantly better disclosure ability, McKenzie et al. (1997) Barrios et al. (2014). The effective tax rate is expressed by the actual tax rate of the income and an increase of this tax rate predicts higher tax revenue. ...
Despite the general recognition that taxes are generally a strong policy
tool for assessing the macroeconomic impact of the country's alternative
tax policies, taxes are often weakened by restrictions on
tax revenue measurement. The aim of the contribution is to quantify
the impact of selected macroeconomic indicators (gross domestic
product, level of employment, public debt, foreign direct investments,
effective tax rate, statutory tax rate) on the total amount of
tax revenues, taking into account the tax competitiveness of the 28
EU member states. There was used methods of three models of regression
analysis: the pooling model, the fixed effects model and the
random effects model. The hypothesis that the gross domestic product
has the greatest impact on tax revenue has been tested. In
conclusion, the analysis confirmed that the strongest correlation is
between tax revenues and employment rate. Followed by foreign direct
investment and gross domestic product. Increasing these determinants
by 1 mil. € (increase in employment by 1%) would increase
tax revenues by 10 072 mil. € at the employment rate, by 383.1
thousand € for gross domestic product and by 434.2 thousand € for
foreign direct investment.
... Implicit effective tax rate is calculated as a ratio of applicable taxes to the subject of taxation and is used to measure the effectiveness of taxation of labour, capital, consumption, and energy ( Mejzlík et al., 2014). Effective marginal tax rate is used for considering a marginal increase in the use of production factors ( Barrios et al., 2014). This paper analyses the implicit effective tax rate. ...
Nowadays, influence of international business groups on the individual countries’ economic systems is still growing. Effective tax rate showing a real level of the tax burden is one of the most important parameters of each economy. This article analyses the factors affecting the effective corporate income tax rate of the “blue chips” in the Czech Republic and in the Russian Federation. The factors are divided into two groups: external and internal ones. The hypothesis states that the internal factors (assets, debt ratio and equity) are more correlated with the dependent variable than the external ones (Paying Taxes index and average oil price). The regression analysis, particularly, panel data model with fixed effects, was used to estimate influence of the independent variables on the effective tax rate separately in Russia and Czech Republic. The research demonstrated that the mentioned internal factors are more significant for the Russian companies that the external factors. In the case of the Czech Republic, the same result was obtained with lower confidence level.
Tax competition has morphed the corporate tax into a source-based tax with falling rates. Past proposals to integrate corporate taxes with the residence-based personal income tax were rejected because of revenue loss and poorly designed alternatives, but in light of falling tax rates and revenues, integration has become viable. An updated version of the simple and practical 1803 British system would impute corporate income to shareholders and have corporations withhold taxes paid on that income. It would reduce distortions of the current code, including that between domestic and foreign production, could provide more government revenue, and would be more progressive.
EU taxes play a key role in political and economic discussions about the future of the EU own resource system, and their desirability can vary accordingly. It is therefore essential to clearly articulate the goals which are to be achieved by the introduction of this new financing tool. This paper provides a critical review of pros and cons of EU taxes put forward in the literature. Reviewing the conventional fiscal federalism and political economy literature on this topic it can be concluded that there is no convincing (overall) case for funding the EU budget with EU taxes rather than with contributions by Member States which currently make up for the lion’s share of EU own resources. There are, however, some specific issues arising from a sustainability perspective, which could be addressed with the introduction of EU taxes. Departing from a comprehensive concept of sustainability which is based on the economic, the social, the environmental and the cultural/institutional pillar of sustainability, the paper identifies existing sustainability gaps in taxation in the EU. EU taxes if designed accordingly may be suitable instruments to reduce these sustainability gaps and thus to strengthen sustainability-orientation of taxation in the EU.
