An Analysis on the Influence of R&D Fiscal and Tax Subsidies on Regional Innovation Efficiency: Empirical Evidence from China

To promote the National Mid-andLong-Term Scientific and Technical Development Program, utilizing the technical innovation data from 30 provinces of China from2002–2016, this paper evaluates the inter-provincial differences of China’s regional innovation efficiency from four aspects of technical efficiency, efficiency index change, returns to scale, and projection analysis by using the DEA-Malmquist index method and constructs of the DEA-Tobit random response model to explore the impact of government funding on regional innovation efficiency. The research results show that: (1) The local development of regional innovation efficiency in China is unbalanced, and the level of pure technical efficiency restricts the improvement of innovation efficiency. (2) In the prophase of the scientific and technical development plan, technological progress has led to the growth of total factor productivity, resulting in the formation of scale effect; in the later stage, the scale return shows an overall increasing trend, and the continuous expansion of technological scale and opportunities has improved the regional innovation efficiency. (3) The R&D fiscal and tax subsidies have policy sustainability, and the direct government funding can significantly improve innovation efficiency, while the enterprises investment is opposite, and the pretax additional deduction has a negative but not significant impact. The government should give priority to direct subsidy and supplemented by tax preference, making reasonable policy allocations to expand the policy effect.

What Links These Stories?

This chapter looks at the common threads that unite the various disaster stories of ancient Byzantium, the Middle East, the French Revolution, and modern-day Somalia. First, cooperation helps; factionalism and infighting hurt. The French aristocracy doomed itself by splintering while arguing over which subset of nobles would have to pay the new taxes, and the interclan divisions prevented the Somalians from developing a unified response to defend themselves against British or Italian colonizers. Second, governments do not survive without adequate tax revenues. Byzantium doomed itself by granting tax subsidies to its nobility, while the Somalian government was always in tenuous straits due to the lack of taxable surplus in the country. Third, the economy matters, and fourth, ecological preservation can be essential to economic growth. Fifth, ethnic tensions inhibit rational state policy: the inability of African or Middle Eastern countries to prevent the loss of the semiarid came from governments paralyzed by ethnic divisions. Finally, state capacity matters: Somalia's government was crippled by widespread corruption and flagrant lack of expertise.

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

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

Employment effects of payroll tax subsidies

This paper exploits several reforms of wage subsidies in the framework of the German Minijob program to investigate substitution and complementarity relationships between subsidized and non-subsidized labor demand. We apply an instrumental variables approach and use administrative data on German establishments for the period 1999–2014. Particularly in small establishments (0–9 employees), subsidized Minijob employment comprises large shares of the work force, on average over 40%. For these establishments, robust evidence shows that increasing the subsidization of Minijob employment crowds out non-subsidized employment. Our results imply that Minijob employment in 2014 may have eliminated more than 0.5 million unsubsidized employment relationships just in small establishments. This represents an unintended and harmful consequence of the Minijob subsidy.

Tax subsidies for entrepreneurs in case of property tax

In Polish tax law, real estate is subject to taxation. Property tax rates depend not only on the type of property but also on the taxable person. Thus, as far as persons conducting business activity are concerned, real estate in their possession is taxed at a higher rate than that of natural persons. The amount of the tax payable annually may exceed the income of the trader concerned, since it does not depend on the taxable person's financial situation (as is the case with other taxes, e.g. personal income tax). Due to this fact, a catalog of tax reliefs and exemptions, i.e. the so-called tax subsidies, as well as the possibility of spreading the tax in instalments and deferring its payment date is an important role in real estate tax. The state, including municipalities, may create this form of aid, as long as it does not conflict with the provisions of the Act on State Aid and similar provisions in force in the European Union, which are designed to observe free competition in the market. The purpose of this Article is to indicate what are the current forms of assistance to entrepreneurs on the example of property tax.

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

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

Union Density Effects on Productivity and Wages

We exploit changes in tax subsidies for union members in Norway to identify the effects of changes in firm-level union density on productivity and wages. Increased deductions in taxable income for union members led to higher membership rates and contributed to a lower decline in union membership rates over time in Norway. Accounting for selection effects and the potential endogeneity of unionisation, the results show that increasing union density at the firm level leads to a substantial increase in both productivity and wages. The wage effect is larger in more productive firms, consistent with rent-sharing models.

Automation and Workers: Re-Imagining the Income Tax for the Digital Age

In the age of automation, more and more workers lose jobs or become gig workers, and the share of labour income in national income is expected to decline further. These developments threaten the sustainability of Canada's 102-year-old income tax as a major source of government revenue and a key instrument for redistributing social income. The authors make the case for re-imagining the income tax to suit the digital age. They propose that all workers should be taxed the same, regardless of the private-law arrangements or technical means used to carry out the work. They call for a reconceptualization of the source of income as human capital, capital, or business. They suggest ways of amending the Income Tax Act to ensure that income from work is not embedded in capital or disguised as active business income that warrants tax subsidies. To ensure the implementation of such re-imagined tax, the authors suggest broadening the scope of withholding tax by taking advantage of technological advances.