Individual Preferences as Supply Determinants in the Municipal and Federal Bond Markets

1977 ◽  
Vol 5 (2) ◽  
pp. 175-202 ◽  
Author(s):  
Royd. Adams
Keyword(s):  
Interest Rates ◽  
Low Income ◽  
Income Tax ◽  
Bond Markets ◽  
Personal Interest ◽  
Tax Reforms ◽  
Tax Rate ◽  
Individual Preferences ◽  
Small Stock ◽  
Rate Ratios

This paper adds to the small stock of existing literature on the determinants of individual preferences regarding tax postponement via government borrowing. It is shown that because of the treatment of personal interest receipts and payments under the progressive U.S. individual income tax, there is reason for low-income persons to prefer bond-financed tax postponement, while higher-income persons have reason to oppose government borrowing. Since the income level separating the groups with opposing preferences depends on both interest rate ratios and the income tax rate structure, it is possible to predict the effect of tax reforms, inflation, and political reforms upon the quantity of government borrowing and the interest rates which apply to it.

scholarly journals Does Cutting the Tax Rate to Zero Induce Behavior Different from Other Tax Cuts? Evidence from Pakistan

2020 ◽  
Vol 102 (3) ◽  
pp. 426-441 ◽  
Author(s):  
Mazhar Waseem
Keyword(s):  
Low Income ◽  
Tax Evasion ◽  
Tax Reforms ◽  
Middle Income ◽  
Tax Rate ◽  
Taxable Income ◽  
Administrative Records ◽  
The Difference ◽  
Wage Earners ◽  
Tax Cuts

Using a series of Pakistani tax reforms and administrative records, I document that taxable income responses induced by to-zero tax cuts are orders of magnitude larger than ones induced by similar-sized other cuts. This finding is remarkably robust to alternative specifications and holds for both the self-employed and wage earners. I explore salience, selective enforcement, and discontinuous evasion costs as explanations of the observed behavior. I find that the data favor the last explanation. The difference between the two sets of responses is primarily driven by a large, discrete tax evasion response, which is included in the former but not in the latter behavior. I estimate the difference as a lower bound on tax evasion, showing that at least 70% of the income of low- and middle-income self-employed and 1% of low-income wage earners goes unreported.

scholarly journals Corporate Income Tax Rate and Foreign Direct Investment: A Cross-Country Empirical Study

2020 ◽  
Vol 66 (1) ◽  
pp. 25
Author(s):  
Amalia Indah Sujarwati ◽  
Riatu Mariatul Qibthiyyah
Keyword(s):  
Foreign Direct Investment ◽  
Low Income ◽  
Income Tax ◽  
Direct Investment ◽  
Corporate Income Tax ◽  
Low Income Countries ◽  
Tax Havens ◽  
Middle Income ◽  
Tax Rate ◽  
The Impact

This study aims to explore the impact of Corporate Income Tax Rate (CITR) on Foreign Direct Investment (FDI), specified based on income levels of countries. Using an unbalanced fixed-effect method of 112 countries over the period of 2003–2017, our finding shows that CITR has no significant impact on FDI. Corporate Income Tax (CIT) is levied on all firms, and as CIT is generally more complex than other types of taxes, its influences on FDI are in question. Excluding tax havens from the sample, our findings show that CITR has a weak significance only in the lower-middle-income and low-income countries.

scholarly journals Introduction of the personal tax-free allowance in Russia and its budget implications

2021 ◽  
Vol 7 (1) ◽  
pp. 20-38
Author(s):  
V. V. Gromov ◽  
Keyword(s):  
Low Income ◽  
Income Tax ◽  
Minimum Cost ◽  
Personal Income ◽  
Personal Income Tax ◽  
Cost Of Living ◽  
Tax Rate ◽  
Tax Revenues ◽  
Regional Product ◽  
Personal Tax

The social problem of poverty can be mitigated by introduction of a personal tax-free allowance. In this paper the likely effects that a personal tax-free allowance will have on the Russian budget is investigated. It has been assumed that a tax-free allowance will hit regional budgets because they depend greatly on income tax revenue. The indicated effects were estimated by applying a personal tax-free allowance to the data on economic conditions in 2019. Rosstat data on population, poverty, wages and gross regional product and Federal Tax Service data on the number of taxpayers and personal income tax revenues were used. For the purpose of the paper, two scenarios were calculated. In the first scenario, a zero personal income tax rate is applied to wages below the minimum cost of living. We found that under this scenario the consolidated budget of Russia loses over 1 trillion rubles while regional tax revenues reduce by more than 10%. In the second scenario, citizens whose income is below the minimum cost of living are exempt from personal income tax. We found that under this scenario regional tax revenues would be reduced by 1-5%. In both cases the introduction of the personal tax-free allowance puts greater pressure on regions that critically depend on the personal income tax receipts. It was concluded that the negative effect of an introduction of a personal tax-free allowance would be greater, the greater the prevalence of low-income taxpayers in a region. Also considerable regional disparities create a risk that such tax reform will deepen regional inequality and be disruptive for the Russian budgetary system.

scholarly journals Evidence and projections on the progressivity of health care financing in Finland

2018 ◽  
pp. 49-62
Author(s):  
Jan Klavus ◽  
Pekka Rissanen
Keyword(s):  
Health Care ◽  
Low Income ◽  
Income Tax ◽  
Health Care Financing ◽  
System Level ◽  
Financing System ◽  
Tax Rate ◽  
State Income Tax ◽  
Reimbursement Scheme ◽  
State Income

This paper examined the distribution of health care financing in Finland in 1990-2012. In addition, the study provided insight to recent developments in the financing system, and analyzed various scenarios associated with the planned financing reform of 2020. The results indicated, that over the two decade study period overall progressivity first steadily decreased, and after turning regressive by 2006, returned to a progressive track leading to the highest level of measured progressivity by 2012. The distributional implications of the financing reform in the “stationary” scenario were shown to be significant; substituting revenue collected previously by local income taxes by an equiproportinate increase in state income tax revenue would increase the progressivity of overall financing to an unprecedentedly high level. In the “counterbalanced” scenario, where the state income tax scales were adjusted to correspond to the average income tax rate, the progressivity of overall financing increased more moderately. Finally, the “system-level” scenario indicated that taking into account recent changes in other financing sources outweighed the progressivity effect, and a slightly less progressive overall financing distribution would emerge in 2020 in comparison to 2012. The monetary effects of abolishing the public reimbursement scheme of private health services fees were shown to be rather small in magnitude, but the economic burden fell more heavily on low-income households. Published: Online May 2018.

THE ECONOMIC EXISTENCE OF THE STATE IS IMPLEMENTED IN TAXES

2018 ◽  
pp. 356-358
Author(s):  
Oleg I. Mariskin
Keyword(s):  
Income Tax ◽  
Western Siberia ◽  
The State ◽  
Tax Reforms ◽  
Poll Tax

The review on the book: Kirillov A. K. From the Poll Tax to Income Tax: Tax Reforms of Capitalistic Russia and Their Implementation in Western Siberia in the second half of the XIX – early XX century. Novosibirsk, 2017, 178 p.

scholarly journals A Theory of Foreign Exchange Interventions

2021 ◽  
Author(s):  
Sebastián Fanelli ◽  
Ludwig Straub
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Open Economy ◽  
Small Open Economy ◽  
Bond Markets ◽  
Pecuniary Externality ◽  
Optimal Intervention ◽  
The Exchange Rate ◽  
Intervention Policy

Abstract We study a real small open economy with two key ingredients (1) partial segmentation of home and foreign bond markets and (2) a pecuniary externality that makes the real exchange rate excessively volatile in response to capital flows. Partial segmentation implies that, by intervening in the bond markets, the central bank can affect the exchange rate and the spread between home- and foreign-bond yields. Such interventions allow the central bank to address the pecuniary externality, but they are also costly, as foreigners make carry trade profits. We analytically characterize the optimal intervention policy that solves this trade-off: (1) the optimal policy leans against the wind, stabilizing the exchange rate; (2) it involves smooth spreads but allows exchange rates to jump; (3) it partly relies on “forward guidance,” with non-zero interventions even after the shock has subsided; (4) it requires credibility, in that central banks do not intervene without commitment. Finally, we shed light on the global consequences of widespread interventions, using a multi-country extension of our model. We find that, left to themselves, countries over-accumulate reserves, reducing welfare and leading to inefficiently low world interest rates.

The Effect of Tax Reform on the Dairy Farmer

1973 ◽  
Vol 2 (2) ◽  
pp. 80-88
Author(s):  
E.L. LaDue ◽  
W.R. Bryant
Keyword(s):  
Low Income ◽  
Income Tax ◽  
Tax Reform ◽  
Capital Gains ◽  
Dairy Farmer ◽  
Competitive Disadvantage ◽  
Tax Loss ◽  
Tax Accounting

Recent Congressional testimony has focused on the desirability of eliminating certain income tax “preferences” that are important in agriculture. Specifically, separate proposals have urged that capital gains treatment pertaining to livestock, vineyards and orchards be eliminated and that the cash method of tax accounting no longer be permitted. The justification for these proposals is based on the continued activity of wealthy individuals in tax loss or tax sheltered farming, despite provisions of the Tax Reform Act of 1969 to limit such ventures. Furthermore, it is argued that these tax preferences result in a greater subsidy to the high tax bracket individual than low tax bracket individual and thus place low income bonafide farmers at a competitive disadvantage which could force them out of business.

Notes on the Effect of Changes in Rates of Interest on the Bonus-Earning Power of an Office Paying a Uniform Compound Reversionary Bonus

1945 ◽  
Vol 17 ◽  
pp. 137-173
Author(s):  
John Leslie Anderson
Keyword(s):  
Interest Rates ◽  
Special Reference ◽  
General Problem ◽  
Income Tax ◽  
List Type ◽  
Type Number ◽  
Subsequent Change ◽  
Earning Power

SynopsisThe Paper discusses the general problem of appreciation and depreciation, with special reference to the relation between maturing assets and maturing liabilities, and describes a method of calculating the bonus-earning power of different classes of policy. This method is used to test the effect on bonus-earning power of two types of changes in interest rates:–(a)a change, such as that caused by the War Loan conversion of 1932, which takes effect gradually; and(b)a subsequent change, due to a rise in the rate of income tax, which has an immediate effect on the income from existing as well as investments.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

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