scholarly journals Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms

2016 ◽  
Vol 106 (9) ◽  
pp. 2582-2624 ◽  
Author(s):  
Juan Carlos Suárez Serrato ◽  
Owen Zidar
Keyword(s):  
Open Economy ◽  
Structural Parameters ◽  
Heterogeneous Firms ◽  
Reduced Form ◽  
Tax Rates ◽  
Spatial Equilibrium ◽  
Corporate Tax ◽  
Spatial Equilibrium Model ◽  
Tax Changes ◽  
Firm Owners

This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40 percent of the incidence, while workers and landowners bear 30–35 percent and 25–30 percent, respectively. (JEL H22, H25, H32, H71, R23, R51)

scholarly journals Macroeconometric Assessment of Monetary Approach to Balance of Payments in a Small Open Economy: The Nigeria Experience

2020 ◽  
pp. 41-50
Author(s):  
Atoi Ngozi Victor
Keyword(s):  
Open Economy ◽  
Structural Parameters ◽  
Small Open Economy ◽  
Reduced Form ◽  
Foreign Reserve ◽  
Long Run ◽  
Monetary Approach ◽  
Velocity Of Money ◽  
Domestic Credit ◽  
Marginal Propensity

Monetary approach to balance of payment establishes a link between foreign reserve assets and money supply. This link is important for managing balance of payment disequilibrium through adjustment of monetary aggregates. This study relies on the (Polak, 1957;1997) monetary model with data from 2007:Q1 to 2018:Q4 to examine the link between monetary factors and balance of payment in Nigeria. To circumvent simultaneity, the reduced form coefficients of the structural form of the Polak model are estimated using Two Stage Least Squares (TSLS) technique, while the structural parameters are recovered from the estimated reduced form coefficients. The results are enriching and robust. The Johansen cointegration procedure suggests a long run relationship among the macroeconomic variables in the balance of payment function. The estimated balance of payment model reveals that domestic credit is statistically significant and negatively related to foreign reserve assets, implying that balance of payment is a monetary phenomenon in Nigeria. The velocity of money circulation and the marginal propensity to import are approximately 120 percent and 14 percent, respectively. The study therefore recommends that the monetary authority should consider the use of domestic credit for management of balance of payment disequilibrium. It is also pertinent to increase domestic credit to grow the economy since such action will marginally decrease external reserve assets through increase in import, however, the net effect will enhance the overall economy.

scholarly journals On the Political Economy of State Corporate Tax Reforms in the U.S.

2019 ◽  
Vol 11 (3) ◽  
pp. 25
Author(s):  
Eliakim Kakpo
Keyword(s):  
Political Economy ◽  
Political Ideology ◽  
The Political ◽  
Tax Rates ◽  
Corporate Tax ◽  
Tax Reforms ◽  
Economic Cycles ◽  
State Tax ◽  
Economic Developments ◽  
Tax Changes

This paper discusses the political economy of U.S. state corporate tax reforms. Using a unique dataset of state effective corporate tax rates over the period 1969-2015, I observe that business tax changes are associated with tax competition, swings in economic cycles, and left-right political ideology. In contrast, long-term debt and budgetary pressures do not correlate with state corporate tax policies. Moreover, I document a regional heterogeneity and notice a slowdown in state tax changes after the Federal Reform Act of 1986. These findings matter for the empirics of corporate tax incidence, which is increasingly concerned with the endogeneity between tax reforms and other economic developments.

Implicit Taxes Amid Race to the Bottom in a Global Tax Game

2020 ◽  
Vol 27 (2) ◽  
pp. 42
Author(s):  
Igor Semenenko ◽  
Junwook Yoo ◽  
Parporn Akathaporn
Keyword(s):  
Capital Mobility ◽  
Tax Rates ◽  
Corporate Tax ◽  
Firm Level ◽  
Race To The Bottom ◽  
Tax Subsidy ◽  
Tax Subsidies ◽  
Level Data ◽  
Tax Returns ◽  
Tax Hypothesis

Growing tax competition among national governments in the presence of capital mobility distorts equilibrium in the international corporate tax market. This paper is related to the literature that examines impact of international tax policies on corporate accounting statements. Employing international firm-level data, this study revisits the race-to-the-bottom hypothesis and documents that tax exemptions lowering effective tax rates relative to statutory rates increase pre-tax returns. This finding directly contradicts the implicit tax hypothesis documented by Wilkie (1992), who provided empirical evidence on inverse relationship between pre-tax return and tax subsidy. We also find evidences that relative importance of permanent versus timing component depends on the geography and that decline in corporate tax rates reduces impact of tax subsidies on profitability. Our findings suggest that tax subsidies play a different role than in 1968-1985, which was examined by Wilkie (1992). These results are consistent with the race-to-the-bottom hypothesis and income shifting explanation

Transocean and the History of Tax Inversions

2018 ◽  
Vol 34 (1) ◽  
pp. 1-12
Author(s):  
Susan M. Albring ◽  
Randal J. Elder ◽  
Mitchell A. Franklin
Keyword(s):  
Multinational Corporations ◽  
Economic Impacts ◽  
Income Taxes ◽  
Tax Rates ◽  
Corporate Tax ◽  
Corporate Income Taxes ◽  
History Of ◽  
Jobs Act ◽  
The U.S ◽  
Over Time

ABSTRACT The first tax inversion in 1983 was followed by small waves of subsequent inversion activity, including two inversions completed by Transocean. Significant media and political attention focused on transactions made by U.S. multinational corporations that were primarily designed to reduce U.S. corporate income taxes. As a result, the U.S. government took several actions to limit inversion activity. The Tax Cuts and Jobs Act of 2017 (TCJA) significantly lowered U.S. corporate tax rates and one expected impact of TCJA is a reduction of inversion activity. Students use the Transocean inversions to understand the reasons why companies complete a tax inversion and how the U.S. tax code affects inversion activity. Students also learn about the structure of inversion transactions and how they have changed over time as the U.S. government attempted to limit them. Students also assess the tax and economic impacts of inversion transactions to evaluate tax policy.

scholarly journals Trade credit, trade income elasticity and the international transmission of shocks

2021 ◽  
Author(s):  
Anna Watson
Keyword(s):  
International Trade ◽  
Open Economy ◽  
Trade Credit ◽  
Income Elasticity ◽  
Heterogeneous Firms ◽  
Firm Level ◽  
Macroeconomic Shocks ◽  
Cyclical Fluctuations ◽  
Irish Data ◽  
The Impact

AbstractThe paper examines the impact of trade credit on cyclical fluctuations in international trade. It provides new empirical evidence based on firm-level UK and Irish data showing that exporters use trade credit more actively and intensively than non-exporters. The study introduces inter-firm lending into an open economy general equilibrium model with heterogeneous firms and endogenous entry into the exports market. It demonstrates that trade credit amplifies the impact of macroeconomic shocks on international trade both along the intensive and extensive margins and that it significantly contributes to the high trade income elasticity observed in the data.

scholarly journals Forest Product Trade Impacts of an Invasive Species: Modeling Structure and Intervention Trade-Offs

2006 ◽  
Vol 35 (1) ◽  
pp. 128-143 ◽  
Author(s):  
Jeffrey P. Prestemon ◽  
Shushuai Zhu ◽  
James A. Turner ◽  
Joseph Buongiorno ◽  
Ruhong Li
Keyword(s):  
Forest Products ◽  
The United States ◽  
Global Market ◽  
Forest Sector ◽  
Spatial Equilibrium ◽  
Trade Offs ◽  
Spatial Equilibrium Model ◽  
The World ◽  
Nun Moth ◽  
Market Consequences

Asian gypsy and nun moth introductions into the United States, possibly arriving on imported Siberian coniferous logs, threaten domestic forests and product markets and could have global market consequences. We simulate, using the Global Forest Products Model (a spatial equilibrium model of the world forest sector), the consequences under current policies of a widespread, successful pest invasion, and of plausible trading partner responses to the successful invasion. We find that trade liberalization would have a negligible effect on U.S. imports of Siberian logs and, consequently, on the risk of a pest invasion. But, if it happened, possibly through trade in other commodities, a successful and widespread pest invasion would have large effects on producers and consumers over the period 2002 to 2030.

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