The Effect of Taxation on Corporate Financing and Investment

Extensive empirical research concerning the impact of taxes on corporate decisions has had trouble identifying seemingly obvious effects. Perhaps the problem is that the seemingly obvious tax predictions are not quite right. We provide an equilibrium model with both corporate and personal taxes. In the steady-state equilibrium, the corporate tax rate affects the level of production despite interest deductibility at the firm level, but not household-level taxes on interest earnings or dividends. We prove several other tax irrelevance results and document a Laffer curve in the corporate tax rate.

Dividend Policy, Personal Taxes and Optimal Capital Structure

<p>This paper puts forward a capital structure model that incorporates the impacts of dividend policy and personal taxes that are commonly ignored by the existing capital structure models. The results show that paying dividends can reduce the tax benefits from issuing debts, which explains why existing capital structure models commonly overestimate leverage ratios. The results further show that as dividend payout increases, leverage ratios and credit spreads increase too. By incorporating the impacts of dividend policy and personal taxes, the capital structure model established in this paper can generate wide range of leverage ratios and credit spreads, which are consistent with what are observed in the real world.</p>

Personal Income Taxes

What’s the difference between personal taxes and business taxes? Some taxes are levied on people and some are levied on businesses. This distinction is less important than you might think. The fact is the person or business entity that writes the check doesn’t necessarily bear...

Paying for Progress: School Taxes, Municipal Government, and Liberal State Building, Cuetzalan and Huehuetla, Mexico, 1876–1930

Focusing on school funding, this article examines the relationship between the majority indigenous population of the Puebla Sierra and the Mexican state from 1876 to 1930. The article questions assumptions about peasant resistance to taxes and about the dearth of rural schooling before 1921. I find that the municipal personal taxes that funded education during the Porfiriato were raised continually in spite of the fact that they burdened the poor disproportionately. Acquiescence to taxation administered by local authorities was further demonstrated when personal taxes were abolished in 1917 and municipalities resuscitated a Porfirian-era education tax in order to maintain schools that state and federal governments would not pay for—a fact ignored by the historiography, which has focused on federal schools. This article argues that municipalities contributed to the emergent educational system and that school funding helped to construct an economically unequal liberal citizenship in which the price for inclusion could be high.

PENGARUH SANKSI PAJAK DAN PELAYANAN KANTOR PAJAK TERHADAP KEPATUHAN WAJIB PAJAK ORANG PRIBADI PADA KANTOR PELAYANAN, PENYULUHAN DAN KONSULTASI PERPAJAKAN KABUPATEN POHUWATO

This research aims to analyze the effect of Tax Sanctions on Personal Taxpayer Compliance. analyze the effect of the Tax Service Services on the Compliance of Individual Taxpayers and to analyze the effect of Tax Sanctions and the Tax Office Services on the Compliance of Personal Taxes. The research method used is multiple regression analysis. The results showed that the Tax Sanction Variable had a positive and significant effect on the compliance of individual taxpayers in Pohuwato Regency KP2KP. The Tax Office service variable has a positive and significant effect on the compliance of personal taxpayers in the Pohuwato Regency KP2KP. Variable tax sanctions and tax office services have a positive and significant effect on the compliance of individual taxpayers in Pohuwato Regency KP2KP. Penelituan ini bertujuan Untuk menganalisis pengaruh Sanksi Pajak terhadap Kepatuhan Wajib Pajak Orang Pribadi. menganalisis pengaruh Pelayanan Aparat Pajak terhadap Kepatuhan Wajib Pajak Orang Pribadi dan Untuk menganalisis pengaruh Sanksi Pajak dan Pelayanan Kantor Pajak terhadap Kepatuhan Wajb Pajak Orang Pribadi. MeTode penelitian yang di gunakan dengan metode analisis regresi berganda. Hasil penelitian menunjukkan Variabel Sanksi Pajak memiliki pengaruh positif dan signifikan terhadap Kepatuhan wajib pajak orang pribadi di KP2KP Kabupaten Pohuwato. Variabel Pelayanan kantor Pajak memiliki pengaruh positif dan signifikan terhadap Kepatuhan wajib pajak oraang pribadi di KP2KP Kabupaten Pohuwato. Variabel sanksi pajak dan pelayanan kantor pajak berpengaruh positif dan signifikan terhadap kepatuhan wajib pajak orang pribadi yang ada di KP2KP Kabupaten Pohuwato.

The Impact of Financial Leverage on the Variance of Stock Returns

This paper investigates the direct theoretical relationship between the variance of stock returns (σ2E) and financial leverage (L) considering both corporate and personal taxes. Using a dataset of U.S. industrial firms, we examine the variance of stock returns as a function of the firm’s financial leverage. We demonstrate that (1) the variance of stock returns is positively related to the firm’s financial leverage, (2) the relationship between the variance of stock returns and financial leverage is positive when corporate and personal taxes are also considered, and (3) with regard to the relationship between the variance of stock returns and financial leverage, using market measures of the latter tends to generate a higher coefficient of determination and a more accurate approximation of the theoretical relationship between financial leverage and the variance of stock returns.

An Estimable Model of Income Redistribution in a Federation: Musgrave Meets Oates

We develop a theory of cross-border income shifting in response to subnational personal taxation in a federation and examine its implications for the excess burden of personal taxes. We show how a properly chosen federal tax rate can offset the fiscal externality between states and facilitate decentralization, even in a heterogeneous federation where unitary taxation is suboptimal. Optimal taxes depend on the elasticities of national tax avoidance and of cross-state tax base shifting. We estimate these elasticities around a tax decentralization reform in Canada, finding both to be empirically relevant. We discuss the implications for optimal federalism. (JEL D31, H21, H23, H24, H26, H71, H77)