scholarly journals The JGTRRAs Tax Rate Cuts: A Financial Incentive For Tax Planning By Owner/Executives Of Small To Medium Closely Held C-Corporations

2011 ◽  
Vol 5 (5) ◽  
Author(s):  
Gregg S. Woodruff
Keyword(s):  
Executive Compensation ◽  
Financial Incentive ◽  
Medium Size ◽  
Computational Formula ◽  
Retirement Plans ◽  
Ceteris Paribus ◽  
Tax Base ◽  
Tax Rate ◽  
Tax Relief ◽  
The Impact

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), creates a financial incentive for the owner/executives of small to medium size closely held corporations to deviate from the Pre-JGTRRA 2002 historical allocations of average taxable corporate income before owner/executive compensation to taxable salary and qualifying dividends.  For purposes of comparison, this paper summarizes the 2002 tax year average taxable corporate incomes before owner/executive compensation for small to medium size closely held corporations, the 2002 average allocations to taxable salary and bonuses or qualifying dividend income and the tax consequences of those allocations.  The 2002 tax year average allocations and tax consequences calculated using the JGTRRA’s tax bases and rate parameters are compared with the results of an iterative numerical search procedure that incorporates the JGTRRA’s tax base and tax rate parameters to mathematically estimate tax-minimizing allocations to owner/executive salary and bonuses versus dividends.  Comparisons of the estimated tax-minimizing allocations’ 2004 (JGTTRA) tax consequences with the 2002 (using JGTTRA) tax year’s average historical allocations’ tax consequences indicate that the JGTRRA has created a financial incentive to deviate from the historical allocations to salary and bonuses versus dividends of the taxable corporate income before owner/executive compensation.  One caveat or constraint to adjusting historical allocations to tax-minimizing allocations would be that the Internal Revenue Service might challenge adjusted allocations as unreasonably low salary compensation that would deprive the treasury of Social Security and Medicare taxes.  Another constraint is that the iterative computations are ceteris paribus for those factors not included in the computational formula.  Specifically this paper does not model for tax deferred contributions to retirement plans and does not model for the impact of the American Jobs Creation Act of 2004 and the deduction for qualified U.S. production activities.

scholarly journals Evaluation the impact of the personal income tax reform in the Czech Republic in 2021 on effective tax rate and tax progressivity

2021 ◽  
Vol 7 (2) ◽  
pp. 134-145
Author(s):  
M. Krajňák ◽  
Keyword(s):  
Income Tax ◽  
Tax Reform ◽  
Personal Income ◽  
Personal Income Tax ◽  
Effective Tax Rate ◽  
Tax Base ◽  
Tax Rate ◽  
Tax Progressivity ◽  
The Impact ◽  
Income Tax Reform

Legislation governing personal income taxation is often subject to changes. A significant personal income tax reform was carried out in the Czech Republic in 2021. The reform implements a progressive tax rate, changes the way the tax base is determined, and increases the tax relief for the taxpayer. The aim of the article is to evaluate the impact of the personal income tax reform on the effective tax rate and tax progressivity. To that end, methods of regression analysis have been used. The source of information for analysis was the data published by the Czech Statistical Office. It was found that in 2021, in comparison with 2020, the tax burden represented in this study by the effective tax rate, in all cases became lower, approximately by 5%. The main reason for this decline is the adjustment of the method of construction of the tax base, which, for the first time in the history of the Income Tax Act, is gross wages. Until the end of 2020, the tax base was a super-gross wage, or the gross wage increased by social security contribution borne by the employer at his costs. The second factor that reduces the tax burden is a CZK 3,000 increase in the deduction per taxpayer per year. This fact increases the degree of tax progressivity, as confirmed by the results of the progressivity analysis and the regression analysis. The changes that have taken place in the personal income tax this year have a positive impact on the taxpayer, but from the point of view of the state, this reform has reduced the state budget revenues.

scholarly journals Comparison of Income Tax Base in Visegrad Countries

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.

The Effect of the Expected Holding Period on the Market Reaction to a Decline in the Capital Gains Tax Rate

2002 ◽  
Vol 24 (s-1) ◽  
pp. 49-64 ◽  
Author(s):  
Jia-Wen Liang ◽  
Steven R. Matsunaga ◽  
Dale C. Morse
Keyword(s):  
Market Reaction ◽  
Capital Gains ◽  
Significant Variable ◽  
Tax Rates ◽  
Capital Gains Tax ◽  
Rate Reduction ◽  
Tax Rate ◽  
Holding Period ◽  
Tax Relief ◽  
The Impact

We use the market reaction to capital gains tax rate reduction in the 1997 Tax Relief Act to investigate the market reaction to a change in investor-level tax rates. We find that the positive market reaction was lower for dividend-paying securities and securities with longer expected holding periods. Our results also support the hypothesis that a longer expected holding period reduces the impact of the dividend-paying status. These results are consistent with the tax capitalization model and suggest that the expected holding period is a significant variable in explaining the market reaction to a change in capital gains tax rates.

The Impact of Tax Incentive Structure On Taxpayers’ Retirement Savings Decisions

2021 ◽  
Author(s):  
Andrew D. Cuccia ◽  
Marcus M. Doxey ◽  
Shane R. Stinson
Keyword(s):  
Retirement Savings ◽  
Defined Contribution ◽  
Retirement Plans ◽  
Incentive Structure ◽  
Tax Rate ◽  
Tax Incentive ◽  
Incentive Structures ◽  
Tax Returns ◽  
Relative Attractiveness ◽  
The Impact

We investigate whether and how the structure of retirement savings incentives influences their relative attractiveness to taxpayers, independent of their effect on after-tax returns. To that end, we examine taxpayers’ preferences between defined contribution retirement plans with back-loaded (i.e., Roth) and front-loaded (i.e., traditional) tax incentives. In three experiments, we find limited evidence that individuals appropriately weight temporal tax rate changes, the primary factor differentiating after-tax returns across incentive structures, in their plan preferences. In contrast, we find consistent evidence that the incentive structure’s relation to taxpayers’ broader attitudes and preferences significantly impacts plan preferences. Overall, we find evidence that generally held attitudes and preferences lead to a systematic preference for back-loaded retirement plans even in situations in which taxpayers know that a back-loaded plan is economically dominated by a front-loaded plan. The results have implications for policymakers and others considering how best to encourage retirement savings.

scholarly journals Breite Bemessungsgrundlage und niedriger Proportionaltarif als alternative Erbschaftsteuerreform – Eine empirische Analyse

2010 ◽  
Vol 11 (2) ◽  
pp. 204-222 ◽  
Author(s):  
Henriette Houben ◽  
Ralf Maiterth
Keyword(s):  
Empirical Analysis ◽  
Tax Reform ◽  
Market Valuation ◽  
Tax Rates ◽  
Tax Base ◽  
Tax Rate ◽  
Inheritance Tax ◽  
Tax Exemptions ◽  
Empirische Analyse ◽  
Tax Relief

AbstractThis submission deals with an alternative to the German Inheritance Tax Reform Act 2009 in form of an inheritance tax with a broad tax base and low tax rates. In contrast to the new German Estate Tax Act we analyse an inheritance tax reform proposal that provides no tax relief for particular asset categories but contains low proportional tax rates. Our empirical analysis shows that abolishing of tax exemptions and market valuation of assets lead to a remarkable broadening of the inheritance tax base and enables substantial tax rate cuts.

The Effect of Taxation and Corruption on Firm Growth: An Empirical Investigation for Vietnam

2016 ◽  
pp. 5-29
Author(s):  
Bich Le Thi Ngoc
Keyword(s):  
International Development ◽  
Firm Growth ◽  
Empirical Investigation ◽  
Manufacturing Firms ◽  
Economic Management ◽  
Tax Rate ◽  
Percentage Point Increase ◽  
Percentage Points ◽  
Point Increase ◽  
The Impact

The aim of this study is to analyze empirically the impact of taxation and corruption on the growth of manufacturing firms in Vietnam. The study employed pooled OLS estimation and then instrument variables with fixed effect for the panel data of 1377 firms in Vietnam from 2005 to 2011. These data were obtained from the survey of the Central Institute for Economic Management and the Danish International Development Agency. The results show that both taxation and corruption are negatively associated with firm growth measured by firm sales adjusted according to the GDP deflator. A one-percentage point increase in the bribery rate is linked with a reduction of 16,883 percentage points in firm revenue, over four and a half times bigger than the effect of a one-percentage point increase in the tax rate. From the findings of this research, the author recommends the Vietnam government to lessen taxation on firms and that there should be an urgent revolution in anti-corruption policies as well as bureaucratic improvement in Vietnam.

Financial and monetary policy of the State and its impact on the income level and poverty reduction in Russia

2020 ◽  
Vol 26 (5) ◽  
pp. 964-990
Author(s):  
N.I. Kulikov ◽  
V.L. Parkhomenko ◽  
Akun Anna Stefani Rozi Mobio
Keyword(s):  
Monetary Policy ◽  
Household Income ◽  
Poverty Reduction ◽  
The State ◽  
Financial Policy ◽  
Gdp Growth ◽  
Tax Rate ◽  
Gdp Growth Rate ◽  
The Government ◽  
The Impact

Subject. We assess the impact of tight financial and monetary policy of the government of the Russian Federation and the Bank of Russia on the level of household income and poverty reduction in Russia. Objectives. The purpose of the study is to analyze the results of financial and monetary policy in Russia and determine why the situation with household income and poverty has not changed for the recent six years, and the GDP growth rate in Russia is significantly lagging behind the global average. Methods. The study employs methods of analysis of scientific and information base, and synthesis of obtained data. The methodology and theoretical framework draw upon works of domestic and foreign scientists on economic and financial support to economy and population’s income. Results. We offer measures for liberalization of the financial and monetary policy of the government and the Central Bank to ensure changes in the structure of the Russian economy. The proposed alternative economic and financial policy of the State will enable the growth of real incomes of the population, poverty reduction by half by 2024, and annual GDP growth up to 6 per cent. Conclusions. It is crucial to change budget priorities, increase the salaries of public employees, introduce a progressive tax rate for individuals; to reduce the key rate to the value of annual inflation and limit the bank margin. The country needs a phased program to increase the population's income, which will ensure consumer demand.

Executive Compensation: New vs. Old Economy and the Impact of NASDAQ Crash and Sarbanes Oxley Act

2008 ◽  
Author(s):  
João Paulo Vieito ◽  
Antonio Melo Cerqueira ◽  
Elísio Brandão ◽  
Walayet A. Khan
Keyword(s):  
Executive Compensation ◽  
Sarbanes Oxley ◽  
Old Economy ◽  
The Impact

The Impact of Transparency and Decision Risk on Human–Automation Teaming Outcomes

2021 ◽  
pp. 001872082110334
Author(s):  
Shayne Loft ◽  
Adella Bhaskara ◽  
Brittany A. Lock ◽  
Michael Skinner ◽  
James Brooks ◽  
...  
Keyword(s):  
Decision Aid ◽  
Financial Incentive ◽  
Decision Aids ◽  
Rejection Rate ◽  
Decision Time ◽  
Correct Rejection ◽  
Incentive Scheme ◽  
Operator Behavior ◽  
The Impact ◽  
Financial Penalty

Objective Examine the effects of decision risk and automation transparency on the accuracy and timeliness of operator decisions, automation verification rates, and subjective workload. Background Decision aids typically benefit performance, but can provide incorrect advice due to contextual factors, creating the potential for automation disuse or misuse. Decision aids can reduce an operator’s manual problem evaluation, and it can also be strategic for operators to minimize verifying automated advice in order to manage workload. Method Participants assigned the optimal unmanned vehicle to complete missions. A decision aid provided advice but was not always reliable. Two levels of decision aid transparency were manipulated between participants. The risk associated with each decision was manipulated using a financial incentive scheme. Participants could use a calculator to verify automated advice; however, this resulted in a financial penalty. Results For high- compared with low-risk decisions, participants were more likely to reject incorrect automated advice and were more likely to verify automation and reported higher workload. Increased transparency did not lead to more accurate decisions and did not impact workload but decreased automation verification and eliminated the increased decision time associated with high decision risk. Conclusion Increased automation transparency was beneficial in that it decreased automation verification and decreased decision time. The increased workload and automation verification for high-risk missions is not necessarily problematic given the improved automation correct rejection rate. Application The findings have potential application to the design of interfaces to improve human–automation teaming, and for anticipating the impact of decision risk on operator behavior.

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