Tax competition and tax base equalization in the presence of multiple tax instruments

The literature on tax competition has argued that tax base equalization, which reduces regional disparities in tax bases, can serve as a means of internalizing horizontal and vertical fiscal externalities. This argument assumes that each government relies on a single tax base (a regional tax on mobile capital and a federal tax on savings). This paper considers the case in which a distortionary labor tax is also available. Internalizing fiscal externalities requires that while the regional capital tax base is fully equalized, a region’s equalization entitlement for the labor tax is positive when its tax base is “larger” than the average tax base of all regions. This efficient tax base equalization system is incompatible with the primary objective of fiscal equalization.

Optimal capital taxation in an economy with innovation-driven growth

This paper investigates optimal capital taxation in an innovation-driven growth model. We examine how the optimal capital tax rate varies with externalities associated with R&D and innovation. Our results show that the optimal capital tax rate is higher when (i) the “stepping on toes effect” is smaller, (ii) the “standing on shoulders effect” is stronger, or (iii) the extent of creative destruction is smaller. The optimal capital tax rate is more likely to be positive when there is underinvestment in R&D. Moreover, the optimal capital tax rate and the monopolistic markup exhibit an inverted-U relationship. By calibrating our model to the US economy, we find that the optimal capital tax rate is positive, at a rate of around 6.6%. Finally, we consider a number of extensions and find that the result of a positive optimal capital tax is robust.

OPTIMIZATION OF THE TAX BURDEN OF THE ENTERPRISE: LEGISLATIVE PREREQUISITES IN THE CONTEXT OF THE EUROPEAN EXPERIENCE

The article is devoted to the problems of the tax burden in Ukraine and the search for ways to adequately optimize it. In the current conditions of economic crisis, there is an urgent need to take measures to support economic entities. One of the current tools is taxation. The purpose of the presented research is to find legislative directions for optimizing the tax burden as a priority of the state in the context of promoting the development of economic entities. The existing attempts to legislatively reform the collection of value added tax and income tax as the main fiscal elements of the impact on the activities of economic entities are analyzed. The directions of improvement of the mechanism of collection of the VAT are offered and it is defined that gradual reduction of the rate annually on 1 point will lead during 2021-2025 to direct losses of tax receipts to the budget from the VAT. Global trends in tax burden optimization are studied. The main differences between the income tax and the withheld capital tax and the consequences of its introduction in Ukraine are analyzed. These recommendations increase the potential application of global trends in the process of reducing the tax burden on domestic enterprises.

Ukraine

Tax policy in Ukraine is engaged in two fronts at once. On one front, very significant work has been done over the years on the gradual improvement and updating of the tax system; on the other, it questions essential tenets of the existing system, exploring fundamental changes to it. While serious efforts have been devoted, for example, to the modernization of the international aspects of the income tax, upgrading the regime to OECD standards, there is a strong push from some quarters of the policy debate to do away with the Corporate Profit Tax (CPT) altogether. The central idea is to replace it with a Distributed Profit Tax (DPT), generally referred to in Ukraine as the Exit Capital Tax (ECT). In essence, this system would not tax profits as they accrue to the corporation, deferring the tax to when the corporation distributes dividends to the shareholder.

Tax Reform in the Context of European Integration Processes and the Crisis: Possible Results for Ukraine

Introduction. Tax system reform should be built on the basic interpretation of taxes as a means of resources’ reallocation providing with social stability, economy stimulation, social goods’ production, etc. All of the taxes have merits as well as flaws. A typical tax system is a combination of different taxes which, in certain circumstances, requires reformation and modernization. Currently, European integration and crisis represent such circumstances for Ukraine. Meeting requirements and conditions of the EU allows fulfilling society requests and realization of the state commitments. All of the above is possible due to the rational formation and use of public finances one of the main tools of which is tax system optimization. Ukraine should bring the tax system into accordance with the EU standards taking into account the interests of the state and business. Its modernization and prediction for the sustainable development of the business environment will contribute to the increase in the income to the state budget while achieving macroeconomic stability. The matter of tax system reformation is especially acute in crisis since beside threats it creates opportunities for implementation of withdrawn capital tax which will promote business development in the future. Purpose. Justification of the need to implement a tax on capital in Ukraine under the conditions of integration processes and crisis. Results. The current work includes analysis of the main elements of the tax systems of Ukraine and the EU countries. It has been established, in particular, that tax proceedings to the budget constitute the main part of the state budget income in Ukraine as well as in countries- members of the EU. The personal income tax, business income tax, excises tax, value-added tax, in their turn, are the main sources of contribution to the state budget. The experience and results of withdrawn capital tax implementation in some countries in the world and the European Union have been researched. It has been established that an increase in investments and GDP is registered in almost all of the analyzed countries. Conclusions. Implementation of the withdrawn capital tax in Ukraine has been proven to be necessary since it will lead to a decrease in administrative expense and amount of time required to prepare the reports, as well as facilitate running a business, increase the levels of business capitalization, create a more enabling environment for investment and increase investment appeal of Ukraine.

Pengaruh Intellectual Capital, Perencanaan Pajak, Dan Pengungkapan Enterprise Risk Management Terhadap Nilai Perusahaan

The aim of this study was to analyze the influence of intellectual capital, tax planning, enterprise risk management discloure on firm value. The data used in this study are annual reports In manufacturing companies listed on the indonesia stock exchange (idx) in the period 2014-2018. The method of taking data samples using purposive sampling method based on certain criteria. Based on the retrieval method obtained A sample of 162 companies. Hypothesis testing in this study uses multiple linear regression analysis. The results show that structural capital, tax planning, and enterprise risk management discloure has no influence on firm value and human capital also customer capital have a positive influence on firm value. The results of this study contribute to the development of knowledge related to company value, especially the importance of human capital and customer capital. For practice, this research provides input to companies in order to maximize their human capital and customer capital. Keywords: Intellectual Capital; Tax Planning; Enterprise Risk Management Disclosure; Firm Value

Positive Long-Run Capital Taxation: Chamley-Judd Revisited

According to the Chamley-Judd result, capital should not be taxed in the long run. In this paper, we overturn this conclusion, showing that it does not follow from the very models used to derive it. For the main model in Judd (1985), we prove that the long-run tax on capital is positive and significant, whenever the intertemporal elasticity of substitution is below one. For higher elasticities, the tax converges to zero but may do so at a slow rate, after centuries of high tax rates. The main model in Chamley (1986) imposes an upper bound on capital taxes. We provide conditions under which these constraints bind forever, implying positive long-run taxes. When this is not the case, the long-run tax may be zero. However, if preferences are recursive and discounting is locally nonconstant (e.g., not additively separable over time), a zero long-run capital tax limit must be accompanied by zero private wealth (zero tax base) or by zero labor taxes (first-best). Finally, we explain why the equivalence of a positive capital tax with ever-increasing consumption taxes does not provide a firm rationale against capital taxation. (JEL H21, H25)