Tax principles and tax harmonization under imperfect competition: A cautionary example

This paper shows that under imperfect competition, the welfare effects of indirect tax harmonization may depend crucially on whether taxes are levied by the destination or the origin principle. In a standard model of imperfect competition, while harmonization always makes at least one country better off, and may be Pareto-improving, when taxes are levied under the destination principle (which currently applies in the European Union), harmonization of origin-based taxes (as recently proposed by the European Commission) is certain to be Pareto-worsening when the preferences in the two countries are identical, and is likely to be so even when they differ.

Thin capitalisation – the multinational tax avoidance strategy the budget forgot

We have already seen major amendments to Australia’s tax regime to tackle base erosion and profit shifting (BEPS). Several more significant measures were announced in the federal budget, most notably the diverted profits tax, aimed at multinationals which shift tax to a lower taxing jurisdiction. Yet to date, a very simple tax minimisation strategy has been largely ignored in the ongoing reforms and was ignored in the federal budget. Excessive debt loading is a problem that not been afforded the same attention as other aggressive tax planning strategies adopted by multinationals.

What if tax reform was a fundamental human right?

As an election looms in Australia, the tax debate continues unabated. Self-interest abounds. When we remove self-interest, we are often reduced to standard design principles for a taxation system. Lost in this discussion is the fundamental purpose of tax, which is to finance government expenditure. Most would argue that tax revenue should be sufficient to meet basic economic and social needs of the community. But how does a community determine what these basic economic and social needs should be? One way is by using a human rights framework. This can provide guidance for both developing and developed countries considering tax reform.

Fundamental Tax Legislation [24th Edition]

Fundamental Tax Legislation 2016 contains the essential provisions from the primary legislation that affects Australia's taxation system. Updated and expanded for changes which occurred in 2015, this volume is an indispensable reference for undergraduate and postgraduate students of taxation. The Year in Review section has been updated to summarise the main legislative developments in taxation over the previous 12 months, a listing of the passage of tax related legislation during the last year and the inclusion of reference statistics (such as CPI quarterly figures and individual tax rates for residents and foreign residents). Also fully updated and revised to reflect the changes in 2015 is the Tax Rates and Tables section, which contains an accessible summary of the main tax rates and tables that students will need to refer to for their tax studies.

Tax Reform and Payout Policy:Do Shareholder Clienteles or Payout Policy Adjust?

Changes in taxation of corporate dividends offer excellent opportunities to study dividend clientele effects. We explore payout policies and ownership structures around a major tax reform that took place in Finland in 2004. Consistent with dividend clienteles affecting firms’ dividend policy decisions, we find that Finnish firms altered their dividend policies based on the changed tax incentives of their largest shareholders. While firms adjust their payout policies, our results also indicate that ownership structures of Finnish firms also changed around the 2004 reform, consistent with shareholder clienteles adjusting to the new tax system.

Tax havens and their impacts on the non-haven countries

Tax havens have attracted increasing attention from the authorities of non-haven countries. The financial crisis exacerbates the negative attitude to tax havens. Offshore zones are now under strong pressure from the international, both financial and political institutions. Thus, the thesis will focus on the current problem of the modern economy, namely tax havens and their impact on the non-haven countries. This thesis will be based on the several articles, in particular “Tax Competition With Parasitic Tax Havens” by Joel Slemrod and John D. Wilson (University of Michigan, 2009) and “Do Havens Divert Economic Activity” by James R. Hines Jr., C. Fritz Foley and Mihir A. Desai (Ross School of Business, 2005). This paper provides two completely different and contradictory viewpoints on the problem of coexisting tax havens and non-haven countries. There are two models, examined in this work, present two important researches. The first one will be concentrated on the positive effect from tax havens whereas the last model will be focused on the completely negative effect from offshore jurisdictions. The first model gives us a good explanation and proof of its statement why tax havens can positively influence on nearby high-tax countries. It describes that the existence of offshore jurisdictions can stimulate the growth of operations and facilitates economic activity in non-haven countries. In contrast to above mentioned, the model with quite opposite view was presented. This economic model and its analysis confirms the undesirability of the existence of offshore areas. Taking into consideration, that the jurisdictions choose their optimal policy, the elimination of offshores will have positive impact on the rest of countries. The model proofs the statement that full or partial elimination of tax havens raises the equilibrium level of the public good and increases country welfare. According to the following study, it can be concluded that both of the models provide telling arguments to prove their assertions. Thereby both of these points of view have their right to exist. Nevertheless, the ongoing debate concerning this issue still will raise a lot of questions.

Second-best tax policy in a growing economy with externalities

This paper investigates the exploitation of environmental resources in a growing economy within a second-best scal policy framework. Agents derive utility from two types of consumption goods one which relies on an environmental input and one which does not as well as from leisure and from environmental amenity values. Property rights for the environmental resource are potentially incomplete. We connect second best policy to essential components of utility by considering the elasticity of substitution among each of the four utility arguments. The results illustrate potentially important relationships between environmental amentity values and leisure. When amenity values are complementary with leisure, for instance when environmental amenities are used for recreation, taxes on extractive goods generally increase over time. On the other hand, optimal taxes on extractive goods generally decrease over time when leisure and environmental amenity values are substitutes. Unders some parameterizations, complex dynamics leading to nonmonotonic time paths for the state variables can emerge.

Explosive Hyperinflation, Inflation Tax Laffer Curve and Modelling the use of Money

This paper analyzes the existence of an inflation tax Laffer curve (ITLC) in the context of two standard optimizing monetary models: a cash-in-advance model and a money in the utility function model. Agents’ preferences are characterized in the two models by a constant relative risk aversion utility function. Explosive hyperinflation rules out the presence of an ITLC. In the context of a cash-in-advance economy, this paper shows that explosive hyperinflation is feasible and thus an ITLC is ruled out whenever the relative risk aversion parameter is greater than one. In the context of an optimizing model with money in the utility function, this paper firstly shows that an ITLC is ruled out. Moreover, it is shown that explosive hyperinflations are more likely when the transactions role of money is more important. However, hyperinflationary paths are not feasible in this context unless certain restrictions are imposed.

Which policy option can be more cost-effective in promoting the use of energy efficient appliances in Europe? A comparison of energy taxes, subsidies, tax credits and bans.

4 p.

Understanding Public Support for Externality-Correcting Taxes and Subsidies: A Lab Experiment

31 p.

Income tax progressivity, growth, income inequality and welfare

This paper analyzes the effects of personal income tax progressivity on long-run economic growth, income inequality and social welfare. The quantitative implications of income tax progressivity increments are illustrated for the US economy under three main headings: individual effects (reduced labor supply and savings, and increased dispersion of tax rates); aggregate effects (lower GDP growth and lower income inequality); and welfare effects (lower dispersion of consumption across individuals and higher leisure levels, but also lower growth of future consumption). The social discount factor proves to be crucial for this third effect: a higher valuation of future generations' well-being requires a lower level of progressivity. Additionally, if tax revenues are used to provide a public good rather than just being discarded, a higher private valuation of such public goods will also call for a lower level of progressivity.