scholarly journals The Role of Taxes in the Disconnect Between Corporate Performance and Economic Growth

2020 ◽  
Vol 66 (11) ◽  
pp. 5427-5447 ◽  
Author(s):  
Urooj Khan ◽  
Suresh Nallareddy ◽  
Ethan Rouen
Keyword(s):  
Economic Growth ◽  
Income Tax ◽  
Corporate Performance ◽  
Underlying Mechanism ◽  
The United States ◽  
Corporate Income Tax ◽  
Tax Rate ◽  
Corporate Profits ◽  
The Impact ◽  
The U.S

We investigate the relation between corporate performance and overall economic growth in the United States. In particular, we focus on the impact of the U.S. corporate tax regime on this relation. Exploiting time-series variation and a tax shock, we document that the relatively higher corporate income tax rate and the tax treatment of foreign earnings of U.S. corporations have contributed to a disconnect between the performance of the corporate sector and the overall economy. Specifically, the growth of domestic (national) corporate profits, on average, has outpaced the growth of the domestic (national) economy, and this disconnect increases as the difference between the U.S. corporate income tax rate and the average tax rate of the other Organisation for Economic Co-operation and Development countries increases. The underlying mechanism is fewer corporate profits being channeled into subsequent domestic investments when the U.S. tax rate is relatively higher, leading to lower economic growth. Our findings have implications for policy setters. This paper was accepted by Brian Bushee, accounting.

scholarly journals The Impact of United States Tax Policies on Sectoral Foreign Direct Investment to Asia

2020 ◽  
Author(s):  
Valerie Mercer-Blackman ◽  
Shiela Camingue-Romance
Keyword(s):  
United States ◽  
Foreign Direct Investment ◽  
Income Tax ◽  
Direct Investment ◽  
The United States ◽  
Business Environment ◽  
Corporate Income Tax ◽  
Market Size ◽  
Tax Rate ◽  
The Impact

Using panel data at the country and sector level spanning almost 15 years, this paper shows that the corporate income tax rate does not affect the United States’ inward foreign direct investment once market size, costs, openness, and the business environment, are taken into account. This is true for United States foreign direct investment bound to developing Asia and across most sectors.

scholarly journals Impact of institutional factors on economic growth in the United States in the years 1979–2007

2015 ◽  
Vol 6 (1) ◽  
pp. 137 ◽  
Author(s):  
Dorota Kuder
Keyword(s):  
United States ◽  
Economic Growth ◽  
The United States ◽  
Business Environment ◽  
Positive Influence ◽  
Institutional Factors ◽  
Working Population ◽  
Proportional Increase ◽  
The Impact ◽  
The U.S

The purpose of this article is to isolate and determine the importance of institutional arrangements in shaping the dynamics of the U.S. GDP in the years 1979–2007. The research hypothesis which has been verified here can be summarized as follows: institutions in the U.S. economy have a positive influence on economic growth through a significant impact on improving the business environment. Having regard to the division of the economy into institutional areas: economic system, labor market, financial market, education and R&D, the author selected these institutional factors which indicated that the operation could be important for the process of economic growth in the United States, and then measured the impact in the years 1979–2007. To verify the thesis about the impact of institutions on economic growth the author used one of the most popular tools in this kind of econometric research – the multiple regression analysis. The analysis revealed that during the period of all the analyzed institutional factors it was the proportion of the working population and the degree of unionization that most strongly influenced the economic growth of the United States – an increase in one of these factors was associated with a much more than proportional increase in the rate of the economic growth.

scholarly journals Simulating Corporate Income Tax Reform Proposals with a Dynamic CGE Model

2017 ◽  
Vol 9 (5) ◽  
pp. 20 ◽  
Author(s):  
Keshab Bhattarai ◽  
Jonathan Haughton ◽  
Michael Head ◽  
David G Tuerck
Keyword(s):  
Computable General Equilibrium ◽  
Income Tax ◽  
Well Being ◽  
The United States ◽  
Computable General Equilibrium Model ◽  
Corporate Income Tax ◽  
Policy Makers ◽  
Tax Rate ◽  
Investment Capital ◽  
Almost All

Opinion leaders and policy makers in the United States have turned their focus to the corporate income tax, which now has the highest statutory rate in the developed world. Using a dynamic computable general equilibrium model (the “NCPA-DCGE Model”), we simulate alternative policies for reducing the U.S. corporate income tax.  We find that reductions in the corporate income tax rate result in significant positive impacts on output, investment, capital formation, employment, and household well-being (for almost all deciles). All of the hypothesized reforms also result in a more-streamlined public sector. These results are plausible insofar as the DCGE model from which they are obtained is parameterized by plausible elasticity assumptions, and incorporates the adjustments in prices, output, employment and investment that result from changes in tax policy.

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.

Analysts' Interpretation of Transitory Earnings Components: Evidence from Forecast Revisions after Disclosure of the 1993 Deferred Tax Adjustment

2003 ◽  
Vol 18 (3) ◽  
pp. 333-353 ◽  
Author(s):  
Kevin C. W. Chen ◽  
Morris G. Danielson ◽  
Michael P. Schoderbek
Keyword(s):  
Income Tax ◽  
Earnings Forecasts ◽  
Corporate Income Tax ◽  
Analyst Forecast ◽  
Tax Rate ◽  
Forecast Revisions ◽  
Future Earnings ◽  
Earnings Components ◽  
Deferred Tax ◽  
The U.S

This study examines analyst forecast revisions after the disclosure of firms' deferred tax adjustments following the U.S. Omnibus Budget Reconciliation Act of 1993 (OBRA), which raised the corporate income tax rate from 34 percent to 35 percent. This deferred tax adjustment was a one-time item, and should have had no effect on analyst estimates of future earnings. However, we find that forecast revisions issued after the disclosure of an income-decreasing deferred tax adjustment were positively related to the amount of the adjustment. The complexity of the deferred tax adjustment and the newness of SFAS 109 (which required the adjustment) may have contributed to the failure of analysts to properly interpret this one-time item when revising their earnings forecasts.

scholarly journals ASYMMETRY OF TAXATION OF TNK ACTIVITIES IN CONDITIONS OF UNEQUALITY OF ECONOMIC DEVELOPMENT

2021 ◽  
Vol 2 (37) ◽  
pp. 105-115
Author(s):  
A. Maksymenko ◽  
V. Kozak
Keyword(s):  
Economic Development ◽  
Income Tax ◽  
Negative Relationship ◽  
Developed Countries ◽  
Corporate Income Tax ◽  
Tax Burden ◽  
Less Developed Countries ◽  
Tax Rate ◽  
The Government ◽  
The Impact

Abstract. The unevenness of economic development significantly dynamizes the vector orientation and clearly shows the nature of economic contradictions, which acquire their concentrated form in the asymmetry of taxation of TNCs. Research shows the relationship between corporate income tax rates and country risk ratings. It has been established that for European countries the negative relationship (positive slope) between the corporate income tax rate and the level of risk for the country prevails. The results of the study confirm the hypothesis that the greater the risk in countries, the higher the corporate income tax rate set by the government. Using econometric methods, the impact of tax legislation of countries on the activities of TNCs was analyzed and it was found that in less developed countries, the tax system to a lesser extent stimulates the business activities of TNCs. At the same time, both less developed countries (Vietnam) and highly developed countries (Japan and Germany) have great potential for improving tax policy. It is proved that in developed countries the greatest directly proportional influence on the indicative turnover of TNCs is exerted by such indicators as the level of tax burden in relation to GDP, corporate tax rate, the rate of deduction of enterprises for social security. The rate of indirect taxes has an inversely proportional effect. The most significant tax factors that determine the dynamics of profits of the respective TNCs are the level of tax burden in relation to GDP. Keywords: tax burden, taxation of TNCs, tax regulation, income tax. JEL Classification H20, F23 Formulas: 0; fig.: 4; tabl.: 2; bibl.: 17.

scholarly journals TAXATION AND ECONOMIC DEVELOPMENT IN THE FORMER COMMUNIST BLOC. A PANEL DATA APPROACH

2020 ◽  
Vol 5 (2) ◽  
pp. 83-91
Author(s):  
Andrei Ionut Husman
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Income Tax ◽  
Personal Income ◽  
Corporate Income Tax ◽  
Personal Income Tax ◽  
Independent Variables ◽  
Eu Member States ◽  
Starting Point ◽  
The Impact

Taxation and its implications are an increasingly debated topic since taxation is a very important tool for the governments of all countries in controlling public finances. At the same time, taxation regulates in one way or another the wealth of a country and, implicitly, of its citizens. In this sense, through this paper we aim to analyse the impact of taxation on economic growth felt by citizens, and our attention has been focused on EU Member States from the former Communist Bloc: Hungary, Poland, Romania, Slovakia and Slovenia. To measure the economic growth felt by the citizens, the best proxy is GDP per capita. Regarding taxation, we resorted to the use the revenues registered from personal income tax, corporate income tax and VAT. The chosen countries share a similar past and had in one way or another the same starting point in the 1990s. These countries are also from the same geographical region (Central and East European countries) and have to some extent comparable economies. Furthermore, we performed an econometric analysis with panel data for the period 2003-2018. The results thus obtained from the econometric tests indicated by an econometric model with random effects showed a direct positive relationship between the dependent variable and the independent variables. The coefficients obtained were statistically significant in the case of independent variables represented by the revenues from personal income tax and VAT, while the coefficient related to revenues from corporate income tax proved to be statistically insignificant.

scholarly journals The impact of tax optimization on the picture of the financial position of enterprises

2019 ◽  
Vol 2019 (103 (159)) ◽  
pp. 9-22
Author(s):  
Adam Adamczyk
Keyword(s):  
Income Tax ◽  
Corporate Income Tax ◽  
Original Research ◽  
Analysis Method ◽  
Tax Rate ◽  
Financial Position ◽  
Net Profit ◽  
Original Contribution ◽  
Reduced Rate ◽  
The Impact

The paper discusses the impact of tax optimization in the area of corporate income tax on the picture of the company's financial position. The purpose of the article is to answer the question whether the introduction of a preferential, reduced rate of corporate income tax for small taxpayers affected the dynamics of revenues from sales and financial results presented by enterprises. The study used the histogram analysis method and U Mann-Whitney's non-parametric test for independent trials. The article confirmed the thesis that the application of a preferential tax rate with a simultaneous rigid revenue criterion resulted in a reduction in the dynamics of sales revenues in the research sample entities. At the same time, it was proved that despite the decrease in sales revenue, the net profit of entities using the preferential rate was improved. The original contribution of the work is the application of the original research methodology.

Joe Biden: A Bearer of Hope

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Fabian Ruthardt
Keyword(s):  
International Economic ◽  
International Cooperation ◽  
Paradigm Shift ◽  
Income Tax ◽  
Large Scale ◽  
The United States ◽  
Corporate Income Tax ◽  
Economic Policies ◽  
Tax Rate ◽  
Positive Growth

Abstract Expectations on Biden’s Presidency are immense. The international community hopes for a paradigm shift away from US unilateral policies and towards more international cooperation. International economic experts expect positive growth effects far beyond the United States. President Biden’s early actions point towards reversing some of President Trump’s core economic policies. President Biden’s reform proposals include large-scale fiscal expansions, a substantial increase of the corporate income tax rate and increased international cooperation in the upcoming years.

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