US tax bill impact depends on how savings are invested

2018 ◽  
Keyword(s):  
Financial Stability ◽  
Capital Investment ◽  
Budget Deficit ◽  
The United States ◽  
Tax Rates ◽  
Effective Tax Rate ◽  
Content Type ◽  
White House ◽  
Tax Rate ◽  
The Us

Subject Business impact of US tax reform. Significance The reforms, which lower tax rates for most US businesses and fundamentally change the tax treatment of US affiliates operating abroad, are the most extensive revision of the US tax system in more than 30 years. According to the White House and Republican legislators, the reforms incentivise capital investment, discourage the offshoring of business investment and earnings and encourage businesses to locate and grow their operations in the United States. Impacts The average effective tax rate on US business drops from 21% to 9% but rises again to 19% by 2027 if temporary provisions are not renewed. US operating firms will save over 1 trillion dollars over ten years, but US multinationals' costs abroad will rise by 0.6 trillion dollars. Estimates of the US GDP impact range from 0.7-2.9% over baseline forecasts in the next ten years, depending on how the savings are invested. Market conditions will determine the asset mix into which businesses invest the savings; best case scenarios will raise productivity. The tax law will increase the budget deficit and borrowing, reducing financial stability and scope to loosen policy.

US tax reform advantages the Republicans, for now

2017 ◽  
Keyword(s):  
Stock Prices ◽  
Republican Party ◽  
Financial Stability ◽  
Budget Deficit ◽  
Tax Reform ◽  
The United States ◽  
Content Type ◽  
Oil Drilling ◽  
The Us ◽  
Tax Returns

Significance The sweeping tax reform is US President Donald Trump’s first major legislative victory. Although the bill met strong opposition, and criticism from many leading economists, Trump secured support from his fellow Republican party legislators in Congress. The bill, the first major federal tax reform since 1986, passed on a partisan vote with no Democratic legislators’ support. Impacts Stock prices will rise on the tax legislation’s passage; overseas money could flow back into the United States. The new legislation accomplishes for many Trump’s goal of simplifying the annual tax returns filing process. The tax reform will increase the US budget deficit and the national debt, damaging financial stability over the medium to longer term. If the Democrats win the House or Senate in 2018, they will likely try pushing back on the tax reform. The tax reform will allow new oil drilling in Alaska and undermines parts of the ‘Obamacare’ health scheme.

Taxation in a mixed economy: the case of China

2017 ◽  
Vol 34 (1) ◽  
pp. 49-61 ◽  
Author(s):  
Davidson Sinclair ◽  
Larry Li
Keyword(s):  
Income Tax ◽  
Central Government ◽  
Corporate Income Tax ◽  
Tax Rates ◽  
Government Ownership ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
For Profit

Purpose The purpose of this paper is to investigate how Chinese firms’ ownership structure is related to their effective tax rate. The People’s Republic of China provides an interesting environment to examine the corporate income tax. Government has significant ownership stakes in the for-profit economy and state-owned enterprises (SOEs) are liable to the corporate income tax. This is very different to most other economies where SOE tends to dominate the not-for-profit economy and pays no corporate income tax. Government ownership also varies between the central government and local government in addition to state asset management bureaus. This provides a rich institutional background to examining the corporate income tax. Design/methodology/approach A panel data analysis approach is used to examine relationship between ownership structure and effective tax rates of all public firms in China from 1999 to 2009. Findings The authors report that effective tax rates do appear to vary across the ownership types, but that SOEs pay a statistically higher effective tax rate than to non-state-owned. In addition, local government owned SOE pay higher effective tax rates than central government and SAMB owned SOE. The authors also investigate Zimmerman’s (1983) political cost hypothesis. Unfortunately, these results are econometrically fragile with the statistical significance of those results varying by empirical technique. Originality/value This paper provides insight into government ownership and taxation in China.

Papal visit is part of Cuba's international opening

2015 ◽  
Keyword(s):  
Latin American ◽  
Financial Institution ◽  
State Institution ◽  
The United States ◽  
Content Type ◽  
White House ◽  
International Financial Institution ◽  
Us Congress ◽  
The Us ◽  
Paris Club

Significance Cuba is working on many fronts to advance its international insertion after the breakthrough restoration of diplomatic ties with the United States. However, progress is gradual and uneven. A first agreement on Cuba's debt has been reached with the Paris Club, underscoring Cuba's interest in regaining access to financial markets. The Latin American Development Bank (CAF) is the first international financial institution to engage with Cuba, but broader cooperation still faces difficulties. Impacts The popular pope's visit will strengthen the Church's political position as Cuba's most important non-state institution. It will also add to pressure on the US Congress from the White House to lift sanctions. Cooperation with CAF and other bodies will require Cuba to supply transparent and comprehensive economic data -- mostly still lacking. Economic reform is likely to see major new liberalisation measures before the Communist Party congress scheduled for April 2016.

US F-16 sale will strengthen Taiwan's China-sceptics

2019 ◽  
Keyword(s):  
United States ◽  
The United States ◽  
Barack Obama ◽  
Trade Negotiations ◽  
Fighter Aircraft ◽  
Content Type ◽  
White House ◽  
The Us ◽  
Total Price ◽  
Trump Administration

Subject The US decision to sell advanced F-16 fighter jets to Taiwan. Significance The Trump administration has authorised the sale to Taiwan of 66 advanced F-16 fighter jets, the most coveted item among Taipei's wish-list of arms purchases from the United States. Taiwan has sought the purchase of advanced fighter aircraft for years, but the White House under both George W Bush and Barack Obama agreed only to upgrades for Taiwan's existing F-16 fleet. The total price is estimated to reach about 8 billion dollars. Impacts The arms sale will provide a boost in confidence for Taiwan, which has been falling behind China in defence capabilities. US-Taiwan cooperation will increase, despite Washington not formally recognising Taiwan as a sovereign nation. Taipei will seek dialogue with Beijing, but will be rebuffed at least until after the 2020 elections. Any sanctions China imposes because of the arms sale will probably be folded into future trade negotiations with Washington.

No woman, no aggressive tax planning? A study on CEO gender and effective tax rates in the Lithuanian retail sector

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aras Zirgulis ◽  
Maik Huettinger ◽  
Dalius Misiunas
Keyword(s):  
Retail Sector ◽  
Tax Rates ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Content Type ◽  
Tax Rate ◽  
Tax Aggressiveness ◽  
Female Ceos ◽  
Opposite Sex ◽  
Ceo Gender

PurposeThe purpose of this paper is to investigate whether switching to a CEO of the opposite sex affects the tax aggressiveness of firms.Design/methodology/approachRegression analysis using a difference in difference approach and propensity score matching on a dataset of 8,798 firms from 2007 to 2017.FindingsThe authors find evidence that switching to a female CEO reduces the effective tax rate paid, implying a higher level of tax aggressiveness.Social implicationsThe findings contradict the narrative that female CEOs are less tax aggressive.Originality/valueThe authors are the first (to the best of the authors' knowledge) to specifically investigate if changing the CEO gender has an impact on the effective tax rate paid by the firm.

Auditor-provided tax services and long-term tax avoidance

2015 ◽  
Vol 14 (3) ◽  
pp. 285-305 ◽  
Author(s):  
Brian Hogan ◽  
Tracy Noga
Keyword(s):  
Negative Relationship ◽  
Tax Avoidance ◽  
Cost Benefit ◽  
Tax Rates ◽  
Negative Consequences ◽  
Effective Tax Rate ◽  
Accounting Firms ◽  
Content Type ◽  
Tax Rate

Purpose – The purpose of this paper is to determine the association between auditor-provided tax services (APTS) and long-term corporate tax rates. Design/methodology/approach – The paper uses empirical data and multivariate regression models to explore the relationship between a firm’s use of APTS and their long-term effective tax rate. Findings – An economically and statistically significant long-term negative relationship was found between firm levels of APTS and taxes paid. Further, a portion of this benefit is lost for some firms when returning to their auditor for tax services even after a short break. Originality/value – This paper contributes to the debate regarding the value of APTS by providing evidence of the apparent long-term negative consequences to firms who reduce their reliance on APTS, perhaps even through the engagement of separate accounting firms for their audit and tax functions, although these consequences may be mitigated upon return with a significant increase in APTS. However, this is the first study, to our knowledge, to explore, in a long-term setting, the consequences of a firm’s return to their auditors for a non-audit service previously reduced or terminated. Additionally, further incremental contributions are made to other studies that look at APTS and tax avoidance by studying the long-term relationship which allows firms to consider the cumulative cost/benefit relationship between independence and knowledge spillover.

The Impact of Juror Knowledge of Deductibility and Defendants' Tax Rates on Punitive Damages Awards: Experimental Evidence

2021 ◽  
Author(s):  
Bryan Church ◽  
Karie Davis-Nozemack ◽  
Lucien Dhooge ◽  
Shankar Venkataraman
Keyword(s):  
Tax Avoidance ◽  
Control Group ◽  
Punitive Damages ◽  
Tax Rates ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
The Us ◽  
Juror Knowledge ◽  
The Cost ◽  
The Impact

The US Tax Code allows corporate defendants to treat punitive damages as a deductible expense. Legal scholars argue that tax-unaware jurors fail to recognize that deductibility significantly reduces defendants' after-tax punishment, leading to an under-punishment problem. They propose that explicitly informing jurors about tax-deductibility could mitigate this problem. We conduct an experiment to test this claim. Compared to a control group of jurors who are told nothing about taxes, jurors who learn about tax-deductibility award higher damages when the defendant's effective tax rate (ETR) is low, but not when ETR is high. Our results highlight the cost of tax avoidance (low ETRs) for firms in a previously unexamined setting. Our findings suggest that allowing jurors to consider tax-deductibility leads to higher damages only under a narrow set of circumstances, offering limited support for the under-punishment hypothesis. Our results should be of interest to scholars in accounting, law, and public policy.

Allies will seek reassurance from next US president

2016 ◽  
Keyword(s):  
Foreign Policy ◽  
The United States ◽  
Sub Saharan Africa ◽  
Structural Constraints ◽  
Content Type ◽  
White House ◽  
The Us ◽  
International Climate ◽  
Sub Saharan

Significance Trump's statements on foreign policy have vexed the leaders of countries allied with the United States, particularly NATO members and in East Asia. Both Clinton and Trump have sought to distinguish their approach to foreign policy from that of President Barack Obama. However, the next president will face structural constraints on a dramatic overhaul of the US national security architecture. Impacts The unknown quality of Trump's foreign policy advisers could lead to erratic policymaking. Washington's ability to promote nuclear restraint in international institutions is likely to diminish. US allies' uncertainty will probably encourage greater national expenditure on defence procurements. A Trump victory would likely undermine international climate governance arrangements. Sub-Saharan Africa and Latin America policy is likely to be set by lower-level policy officials than the immediate White House circle.

Multi-component complex ores: Special aspects of using ad valorem and specific mineral extraction tax rates

2020 ◽  
Vol 26 (6) ◽  
pp. 1297-1314
Author(s):  
T.A. Loginova
Keyword(s):  
Krasnoyarsk Krai ◽  
Tax Rates ◽  
Russian Regions ◽  
Rent Extraction ◽  
Effective Tax Rate ◽  
Mineral Extraction ◽  
Tax Rate ◽  
Significant Differentiation ◽  
The Russian Federation ◽  
Ad Valorem

Subject. This article discusses the issues related to the taxation for multi-component complex ores and commercial components using ad valorem and specific mineral extraction tax (MET) rates. Objectives. The article aims to assess some results of the application of specific MET rates in the Krasnoyarsk Krai and ad valorem rates in other subjects of the Russian Federation, taking into account the specifics of the current taxation procedure for multi-component complex ores and their commercial components. Methods. For the study, I used a comparative analysis, synthesis, and the method of extrapolation. Results. The article shows that the change in the type of MET rate for multi-component complex ores and commercial components has led to a significant increase in the effective tax rate. This led to an increase in the corresponding MET revenues in the Krasnoyarsk Krai. The article also substantiates that the introduction of specific rates in other Russian regions requires a significant differentiation of specific MET rates. However, this is risk-bearing concerning unfair distribution of the tax burden and the complexity of tax administration. Conclusions. The issue of identifying multi-component complex ores and their commercial components is controversial. Extending specific MET rates to other regions may complicate the mechanism of rent extraction.

A Study of Perceived Ethicality of Low Corporate Effective Tax Rates

2017 ◽  
Vol 32 (1) ◽  
pp. 87-104 ◽  
Author(s):  
F. Todd DeZoort ◽  
Troy J. Pollard ◽  
Edward J. Schnee
Keyword(s):  
Mediation Analysis ◽  
General Public ◽  
Tax Avoidance ◽  
Tax Rates ◽  
Perceived Fairness ◽  
Effective Tax Rate ◽  
Effective Tax Rates ◽  
Tax Rate ◽  
Policy Practice ◽  
Participant Group

SYNOPSIS U.S. corporations have the ability to avoid paying domestic taxes to achieve an effective tax rate that is much lower than the statutory federal tax rate. This study evaluates the extent that individuals differ in their attitudes about the ethicality of corporations avoiding domestic taxes to achieve low effective tax rates. We also examine the extent to which the specific tax avoidance method used by corporations to access a low effective tax rate affects perceived ethicality. Eighty-two members of the general public and 112 accountants participated in an experiment with two participant groups and three tax avoidance methods manipulated randomly between subjects. The results indicate a significant interaction between participant group and tax avoidance method, with the general public considering shifting profits out of the country to achieve a low effective tax rate to be highly unethical, while the accountants find tax avoidance from carrying forward prior operating losses to be highly ethical. Further, mediation analysis indicates that perceived fairness and legality mediate the effects of participant type on perceived ethicality. Mediation analysis also reveals that sense of fairness and legality mediate the link between tax avoidance method and perceived ethicality. We conclude by considering the study's policy, practice, and research implications.

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