Can a Single Country Increase the Taxes of Multinational Corporations? Evidence from the Impact of the 1993 Corporate Tax Rate Increase on Fortune 500 Companies

A preliminary study of the impact of tax cuts on job creation was done by studying a random sample of 12 largest corporations selected from the Fortune 500 companies. The Annual Reports of the 12 sample companies pre-tax cut and post-tax cut periods were downloaded, and figures tabulated for revenues, property, plant, and equipment (PPE) as well as employees reported by those companies for both the periods. We found that the revenue increased by an average of 7.78 percent which showed signs of growth in those companies, but the investment in PPE by the companies during the same period increased at an average of only 0.32 percent, which indicated that the companies did not divert the resources they saved in taxes to add capacity. Therefore, the potential for jobs growth was nonexistent or minimal. Another indicator showed the same outcome as the companies reported their workforce reduced since 2017 by an average of 0.54 percent.

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The Impact of Austerity Measures on Government Borrowing in GIIPS

International Journal of Economics and Finance ◽

10.5539/ijef.v8n12p106 ◽

2016 ◽

Vol 8 (12) ◽

pp. 106 ◽

Cited By ~ 1

Author(s):

Imre Ersoy ◽

Talha Yanmaz

Keyword(s):

Empirical Analysis ◽

Rate Increase ◽

Panel Cointegration ◽

Government Debt ◽

Cointegration Test ◽

Tax Rate ◽

Economic Agents ◽

Panel Cointegration Test ◽

Using Data ◽

The Impact

The article investigates the effects of austerity measures on government debt in Greece, Ireland, Italy, Portugal and Spain (GIIPS) by employing panel cointegration test and using data between 1998 and 2014. The result of empirical analysis shows that tax rate increase on personal income did not result with decrease in government debt. Interest rate and wage that are control variables are also positively related with government debt levels. The result of this empirical analysis suggests that the impact of austerity measures on government borrowing in GIIPS is positive, despite the expectations of certain economic agents.

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Measuring the Effects of Corporate Tax Cuts

The Journal of Economic Perspectives ◽

10.1257/jep.32.4.97 ◽

2018 ◽

Vol 32 (4) ◽

pp. 97-120 ◽

Cited By ~ 11

Author(s):

Alan J. Auerbach

Keyword(s):

Multinational Corporations ◽

Income Tax ◽

Capital Investment ◽

Corporate Income Tax ◽

Tax Law ◽

Corporate Tax ◽

The Law ◽

Jobs Act ◽

The Impact ◽

Tax Cuts

On December 22, 2017, President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), the most sweeping revision of US tax law since the Tax Reform Act of 1986. The law introduced many significant changes. However, perhaps none was as important as the changes in the treatment of traditional “C” corporations—those corporations subject to a separate corporate income tax. Beginning in 2018, the federal corporate tax rate fell from 35 percent to 21 percent, some investment qualified for immediate deduction as an expense, and multinational corporations faced a substantially modified treatment of their activities. This paper seeks to evaluate the impact of the Tax Cuts and Jobs Act to understand its effects on resource allocation and distribution. It compares US corporate tax rates to other countries before the 2017 tax law, and describes ways in which the US corporate sector has evolved that are especially relevant to tax policy. The discussion then turns the main changes of the Tax Cuts and Jobs Act of 2017 for the corporate income tax. A range of estimates suggests that the law is likely to contribute to increased US capital investment and, through that, an increase in US wages. The magnitude of these increases is extremely difficult to predict. Indeed, the public debate about the benefits of the new corporate tax provisions enacted (and the alternatives not adopted) has highlighted the limitations of standard approaches in distributional analysis to assigning corporate tax burdens.

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Malaysian corporate tax rate and revenue: the application of Ibn Khaldun tax theory

ISRA International Journal of Islamic Finance ◽

10.1108/ijif-07-2017-0011 ◽

2018 ◽

Vol 10 (2) ◽

pp. 251-262

Author(s):

Hairul Azlan Annuar ◽

Khadijah Isa ◽

Salihu Aramide Ibrahim ◽

Sakiru Adsebola Solarin

Keyword(s):

Cash Flow ◽

Positive Impact ◽

Tax Revenue ◽

Corporate Tax ◽

Gradual Reduction ◽

Content Type ◽

Ibn Khaldun ◽

Tax Rate ◽

Optimal Tax ◽

The Impact

Purpose The present study aims to investigate the impact of the reduction of the corporate tax rate on corporate tax revenue. The study adopts the theory of taxation by Ibn Khaldun, depicted as the Laffer curve. Design/methodology/approach The paper analyses time series data for the period 1996 to 2014 using the autoregressive distributed lag (ARDL) approach. Findings The paper finds that the corporate tax rate has a dual effect on corporate tax revenue over the study period. It shows an inverted U-shape relationship between the corporate tax rate and corporate tax revenue and reveals that the optimal tax rate is 25.5156 per cent. Inferentially, a positive relationship exists between the two variables prior to the optimal tax rate, and a negative relationship prevails afterwards. A further test of causality shows a long-run unidirectional causality between corporate tax rate and corporate tax revenue. Research limitations/implications First, it should be noted that the policy was not implemented in isolation. Several other tax incentives were given to corporate tax payers, and therefore, such incentives should be controlled for to have a more insightful evaluation of the policy. Second and most important, there is a need to investigate whether the increased cash flow available to firms as a result of the reduction in the corporate tax rate adds value to firms. It is also necessary to investigate whether firms’ stakeholders benefited from the increased cash flow or was there managerial diversion of firms’ resources. Practical implications The policy of gradual reduction of the corporate tax rate in Malaysia is suspected to have a positive impact on the productivity of Malaysian companies, which has contributed to an increase in corporate tax revenue. It also has a positive impact on the economic growth of the country. It means that the lower corporate tax rate has actually reduced the cost of doing business in the country. Originality/value The benefit of increased corporate tax revenue needs to be investigated empirically for insightful policy evaluation. In Malaysia, however, such investigation is close to non-existent to the best knowledge of the researchers. Thus, the present study aims at investigating the impact of the policy of gradual reduction of the corporate tax rate on corporate tax revenue over an 18-year period from 1996 to 2014.

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An Exploratory Study of the Impact of the Internet of Things (IoT) on Business Model Innovation

The Internet of Things ◽

10.4018/978-1-5225-1832-7.ch020 ◽

2017 ◽

pp. 423-440

Author(s):

In Lee

Keyword(s):

Business Model ◽

Significant Relationship ◽

Business Models ◽

Implementation Strategies ◽

Fortune 500 ◽

Business Model Innovation ◽

Adoption Rate ◽

Iot Applications ◽

Fortune 500 Companies ◽

The Impact

This paper introduces IoT categories used to build smart enterprises and discusses how Fortune 500 companies may use various IoT applications to innovate their business models. The authors' analysis reveals that there is a significant relationship between the type of IoT applications and the IoT adoption rate and there is also a significant relationship between the type of business model innovation and the IoT adoption rate. Finally, five implementation strategies for smart enterprise development are discussed.

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Abuses and Penalties of a Corporate Tax Inversion

International Journal of Financial Studies ◽

10.3390/ijfs7010005 ◽

2019 ◽

Vol 7 (1) ◽

pp. 5

Author(s):

James Yang ◽

Leonard Lauricella ◽

Frank Aquilino

Keyword(s):

Multinational Corporations ◽

International Taxation ◽

Internal Revenue Service ◽

Tax Law ◽

Corporate Tax ◽

Tax Base ◽

Tax Rate ◽

Tax Savings ◽

Treasury Department ◽

The U.S

There is a serious problem in international taxation today. Many United States (U.S.) multinational corporations have moved abroad to take advantage of a lower tax rate in a foreign country. As a consequence, the tax base in the U.S. has been seriously eroded. This practice is known as “corporate tax inversion”. This paper discusses the abuses and penalties of this phenomenon. It is rooted in some deficiencies in the U.S. tax law. This paper points out that the U.S. has the highest corporate tax rate in the world. It imposes tax on worldwide income. It permits deferral of tax on foreign-sourced income until dividends are repatriated back to the U.S. As a result, it creates tax loopholes. This paper reveals six actual cases of corporate tax inversion. This practice has triggered the Congress to enact §7874, the Internal Revenue Service (IRS) to issue Notices IR 2014-52 and IR 2015-79, and the U.S. Treasury Department to promulgate TD 9761. This paper investigates some details of these penalties. This paper further demonstrates an example in determining the amount of tax savings by engaging in a corporate tax inversion. It also offers many strategies.

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The Impact of Cause Portfolio Focus and Contribution Amount on Stakeholder Evaluations

Business & Society ◽

10.1177/0007650318761858 ◽

2018 ◽

Vol 59 (7) ◽

pp. 1483-1514 ◽

Cited By ~ 1

Author(s):

Meike Eilert ◽

Stefanie Robinson

Keyword(s):

Corporate Philanthropy ◽

Fortune 500 ◽

Data Set ◽

Fortune 500 Companies ◽

The Difference ◽

The Impact ◽

A Company

When companies engage in corporate philanthropy, they can donate to a number of causes supporting a variety of issues, thus establishing cause portfolios. This research examines how the focus of a cause portfolio affects company evaluations. Results from an experiment show that when a company donates a small amount of money, consumers have lower evaluations of a company when the cause portfolio is focused (i.e., supports one issue) versus diverse (i.e., supports many issues). This is because the focused (vs. diverse) portfolio is perceived to have a weaker impact to society. We provide additional evidence of this effect using a data set of Fortune 500 companies’ foundations, showing that cause portfolios are more likely to result in lower stakeholder evaluations when focused (vs. diverse). Again, we find that donation amount alleviates the difference between focused and diverse portfolios. The findings hold important implications for the company’s management of cause portfolios.

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How Fortune 500 Companies Are Using Electronic Résumé Management Systems

Business Communication Quarterly ◽

10.1177/108056999806100302 ◽

1998 ◽

Vol 61 (3) ◽

pp. 8-19 ◽

Cited By ~ 9

Author(s):

William H. Baker ◽

Kristen DeTienne ◽

Karl L. Smart

Keyword(s):

Key Words ◽

Human Resource ◽

Fortune 500 ◽

Management Systems ◽

Job Requirements ◽

Fortune 500 Companies ◽

Research Article ◽

New Applications ◽

The Impact ◽

Infor Mation

Scanning technology is now playing a major role in Human Resource Infor mation Systems (HRIS). As new applications are received, many organiza tions scan the résumés into their databases and subsequently search key words to achieve a match between applicants' qualifications and job requirements. But typographical embellishments on some résumés cause scanning difficul ties. This research article reports the impact of electronic résumé-management systems in Fortune 500 companies and examines the implications of this technology, providing guidelines for producing scanner-friendly résumés.

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Comparison of Income Tax Base in Visegrad Countries

Studies in Business and Economics ◽

10.2478/sbe-2021-0027 ◽

2021 ◽

Vol 16 (2) ◽

pp. 101-110

Author(s):

Jana Hinke ◽

Tomáš Rain ◽

Barbora Hrabovská

Keyword(s):

Literature Review ◽

Income Tax ◽

Corporate Tax ◽

Tax Base ◽

Tax Rate ◽

The Disabled ◽

The Impact ◽

Visegrád Countries ◽

Calculation Procedures

Abstract The objective of the research was to compare the procedures for the calculation of income tax in the Visegrad Four (V4) countries. The statutory income tax calculation procedures are very similar in the V4 countries. Particular systems differ parametrically. Based on a literature review, synthesis of knowledge, comparison and simulation calculations, it can be stated that Hungary has the lowest corporate tax rate, and in the simulative calculations it also produced the lowest tax and highest profit after taxation for a fictitious entity in Hungary. Income tax in the V4 countries differs mainly in the possibility of applying the loss of previous years, in the impact of depreciation on the amount of the tax and in the income tax rebate linked to the employment of the disabled.

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The impact of R&D tax incentive programs on the performance of innovative companies

foresight ◽

10.1108/fs-06-2018-0063 ◽

2019 ◽

Vol 21 (5) ◽

pp. 545-562

Author(s):

Elena Makeeva ◽

Ilona Murashkina ◽

Irina Mikhaleva

Keyword(s):

Explanatory Variable ◽

Corporate Taxation ◽

Corporate Tax ◽

Data Set ◽

Content Type ◽

Tax Rate ◽

Incentive Programs ◽

Incentive Program ◽

Tax Incentive ◽

The Impact

Purpose This study aims to explore the influence of corporate taxation on the performance of innovative companies under various research and development (R&D) tax incentive programs. Design/methodology/approach The empirical model is based on the data of 520 companies for period 2007-2016. This model includes return on assets as the main proxy for performance and effective tax rate as a main explanatory variable. Controlling for other known determinants, the authors divide the sample into the subsamples to control for the various R&D tax incentive programs. The fact that the model includes the lagged explanatory variable of performance the Blundell –Bond model was applied. Findings The authors found evidence that corporate taxation has a significant impact on performance, but the direction could be ambiguous. Impact of the corporate tax rate on performance in general sample is significantly negative, which is consistent with results obtained by authors for the non-innovative companies. However, for further examination, the authors use subsamples of companies with different R&D tax incentive programs. The effect of corporate tax becomes positive under the patent box program only. Moreover, under various R&D tax incentive program, the impact of main control variables has changed. Therefore, the authors conclude that not only corporate taxation but also R&D tax incentive programs significantly influence the performance of innovative companies. Research limitations/implications The data are limited due to fragmented information disclosure about the R&D tax incentive program used. Thus, a different data set might reveal new information and correlation between variable on the same topic. Moreover, the authors do not cover all R&D tax incentive programs, which are specified for companies and countries. However, the study fills the gap between corporate taxation, performance and innovative companies. As the significant result was found the further research is important. The study contributes not only in the field of research but also a practical one. The choice of R&D tax incentive program influences main indicators of companies’ performance so it may change the behavior of the investors and decision-making managers of the companies. Originality/value Given the increasing interest in the topic of innovative companies, this study fills the gap between corporate taxation in innovative companies and performance. In addition, the importance of R&D tax incentive programs as a feature of innovative companies was found.

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