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Harry Grubert - One of the best experts on this subject based on the ideXlab platform.
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The Tax Burden on Cross-Border Investment: Company Strategies and Country Responses
2003Co-Authors: Harry GrubertAbstract:We look at the Tax Burden on direct investment from three perspectives. The first section illustrates how the recognition of company Tax planning and of the importance of intellectual property affects measures of effective Tax rates. It also discusses the methodological issues that arise, such as to which subsidiary the benefits of a multicountry strategy should be attributed. The simulations emphasize the importance of the share of royalties in crossborder income, and of Tax planning strategies such as the shifting of debt to high-Tax locations. At the same time, evidence on actual company behavior is necessary to limit the range of possible Tax avoidance strategies. Otherwise, the effective Tax Burden on cross-border investment would virtually disappear. Even then, the range of possible estimates is large. The simulations also show how home governments can respond to some types of Tax planning by, for example, requiring that parent interest expense be allocated to foreign income. The second section supplements the hypothetical calculations by evaluating the determinants of the actual effective Tax rate on overall U.S. manufacturing investment abroad. Among the various components are the location of assets, the location of debt, other forms of income shifting, the share of royalties, and home government repatriation Taxes. The results are generally consistent with the simulations in the first section. Somewhat surprisingly, real assets seem more mobile than Tax bases, confirming the constraints on Tax avoidance. The first two sections demonstrate that it is not the more ‘obvious’ features of a Tax system, such as whether foreign dividends are Taxed or exempt, that are important, but provisions that govern the Taxation of royalties, the use of Tax haven finance subsidiaries, and the allocation of parent interest expenses to foreign income. The third section introduces host government behavior to see how they Tax different types of companies.
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the Tax Burden on cross border investment company strategies and country responses
Social Science Research Network, 2003Co-Authors: Harry GrubertAbstract:We look at the Tax Burden on direct investment from three perspectives. The first section illustrates how the recognition of company Tax planning and of the importance of intellectual property affects measures of effective Tax rates. It also discusses the methodological issues that arise, such as to which subsidiary the benefits of a multicountry strategy should be attributed. The simulations emphasize the importance of the share of royalties in crossborder income, and of Tax planning strategies such as the shifting of debt to high-Tax locations. At the same time, evidence on actual company behavior is necessary to limit the range of possible Tax avoidance strategies. Otherwise, the effective Tax Burden on cross-border investment would virtually disappear. Even then, the range of possible estimates is large. The simulations also show how home governments can respond to some types of Tax planning by, for example, requiring that parent interest expense be allocated to foreign income. The second section supplements the hypothetical calculations by evaluating the determinants of the actual effective Tax rate on overall U.S. manufacturing investment abroad. Among the various components are the location of assets, the location of debt, other forms of income shifting, the share of royalties, and home government repatriation Taxes. The results are generally consistent with the simulations in the first section. Somewhat surprisingly, real assets seem more mobile than Tax bases, confirming the constraints on Tax avoidance. The first two sections demonstrate that it is not the more "obvious" features of a Tax system, such as whether foreign dividends are Taxed or exempt, that are important, but provisions that govern the Taxation of royalties, the use of Tax haven finance subsidiaries, and the allocation of parent interest expenses to foreign income. The third section introduces host government behavior to see how they Tax different types of companies. As expected, they seem to favor more mobile companies and those that offer benefits to local factors such as labor. Companies that sell a large share of their output offshore receive concessions while those that import a great deal of their components are penalized, presumably because of the positive and negative impacts on country terms of trade. Subsidiaries of R&D intensive companies pay higher effective Tax rates, suggesting rent extraction by the host government.
Xiangrong Jin - One of the best experts on this subject based on the ideXlab platform.
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the heterogeneous Tax Burden evidence from firm level data in china
The Singapore Economic Review, 2017Co-Authors: Xiaohan Guo, Deming Luo, Xiangrong JinAbstract:Firms’ behaviors are not only affected by their Taxation Burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of Tax Burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s Tax Burden in three ways, the value-added Tax (VAT) Burden, the corporate income Tax (CIT) Burden, and the total Tax Burden. By using a Hausman–Taylor estimation, we find: (1) The CIT Burden is positively correlated to the size, while other two Tax Burdens are not; (2) Both the VAT Burden and the total Tax Burden of SOEs are significantly heavier than those of non-SOEs, while the CIT Burden shows the exactly opposite effect; (3) Exporters have a remarkably lower Tax Burden than non-exporters for all three Tax Burden measures; and (4) The western region and particularly the central region have lighter Tax Burden than the eastern region for all three Tax b...
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the heterogeneous Tax Burden evidence from firm level data in china
Social Science Research Network, 2016Co-Authors: Xiaohan Guo, Deming Luo, Xiangrong JinAbstract:Firms’ behaviors are not only affected by their Taxation Burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of Tax Burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s Tax Burden in three ways, the value-dded Tax (VAT) Burden, the corporate income Tax (CIT) Burden, and the total Tax Burden. By using a Hausman–Taylor estimation, we find: (1) The CIT Burden is positively correlated to the size, while other two Tax Burdens are not; (2) Both the VAT Burden and the total Tax Burden of SOEs are significantly heavier than those of non-SOEs, while the CIT Burden shows the exactly opposite effect; (3) Exporters have a remarkably lower Tax Burden than non-exporters for all three Tax Burden measures; and (4) The western region and particularly the central region have lighter Tax Burden than the eastern region for all three Tax Burden measures. We also provide empirical evidence and policy suggestions for continuing to proceed with the structural Tax reduction and the structural fiscal reform in China.
Xiaohan Guo - One of the best experts on this subject based on the ideXlab platform.
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the heterogeneous Tax Burden evidence from firm level data in china
The Singapore Economic Review, 2017Co-Authors: Xiaohan Guo, Deming Luo, Xiangrong JinAbstract:Firms’ behaviors are not only affected by their Taxation Burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of Tax Burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s Tax Burden in three ways, the value-added Tax (VAT) Burden, the corporate income Tax (CIT) Burden, and the total Tax Burden. By using a Hausman–Taylor estimation, we find: (1) The CIT Burden is positively correlated to the size, while other two Tax Burdens are not; (2) Both the VAT Burden and the total Tax Burden of SOEs are significantly heavier than those of non-SOEs, while the CIT Burden shows the exactly opposite effect; (3) Exporters have a remarkably lower Tax Burden than non-exporters for all three Tax Burden measures; and (4) The western region and particularly the central region have lighter Tax Burden than the eastern region for all three Tax b...
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the heterogeneous Tax Burden evidence from firm level data in china
Social Science Research Network, 2016Co-Authors: Xiaohan Guo, Deming Luo, Xiangrong JinAbstract:Firms’ behaviors are not only affected by their Taxation Burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of Tax Burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s Tax Burden in three ways, the value-dded Tax (VAT) Burden, the corporate income Tax (CIT) Burden, and the total Tax Burden. By using a Hausman–Taylor estimation, we find: (1) The CIT Burden is positively correlated to the size, while other two Tax Burdens are not; (2) Both the VAT Burden and the total Tax Burden of SOEs are significantly heavier than those of non-SOEs, while the CIT Burden shows the exactly opposite effect; (3) Exporters have a remarkably lower Tax Burden than non-exporters for all three Tax Burden measures; and (4) The western region and particularly the central region have lighter Tax Burden than the eastern region for all three Tax Burden measures. We also provide empirical evidence and policy suggestions for continuing to proceed with the structural Tax reduction and the structural fiscal reform in China.
Phillip Swagel - One of the best experts on this subject based on the ideXlab platform.
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Tax Burden and migration a political economy theory and evidence
Journal of Public Economics, 2002Co-Authors: Assaf Razin, Efraim Sadka, Phillip SwagelAbstract:Abstract The extent of Taxation and redistribution policy is generally determined as a political-economy equilibrium by a balance between those who gain from higher Taxes/transfers and those who lose. The standard theory of the size of government in a representative democracy links the Tax Burden to measures of the pre-Tax income inequality. We develop in this paper a theory which encompasses the existing literature, and provides a complementary channel linking the Tax Burden in the presence of migration to the ‘fiscal leakage’ from native-born to the migrants. In a stylized model of migration and human capital formation, we show, somewhat against the conventional wisdom, that low-skill immigration can lead to a lower Tax Burden and less redistribution than would be the case with no immigration, even though migrants (naturally) join the pro-Tax/transfer coalition. Data on 11 European countries over the period 1974–1992 are consistent with the implications of the theory: a higher share of low-education immigrants in the population leads to a lower Tax rate on labor income and less generous social transfers.
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Tax Burden and migration a political economy theory and evidence
Research Papers in Economics, 1998Co-Authors: Assaf Razin, Efraim Sadka, Phillip SwagelAbstract:The extent of Taxation and redistribution policy is generally determined as a political-economy equilibrium by a balance between those who gain from higher Taxes/transfers and those who lose. In a stylized model of migration and human capital formation, we show -- somewhat against the conventi onal wisdom -- that low-skill immigration may lead to a lower Tax Burden and less redistribution than would be the case with no immigration, even though migrants (naturally) join the pro-Tax/transfer coalition. Data on 11 European countries over the period 1974 to 1992 are consistent with the implications of the theory: a higher share of immigrants in the populati on leads to a lower Tax rate on labor income, even after controlling for the gen erosity and size of the welfare state, demographics, and the international exposure of the economy. As predicted by the theory, it is the increased share of low education immigrants that leads to the smaller Tax Burden.
Deming Luo - One of the best experts on this subject based on the ideXlab platform.
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the heterogeneous Tax Burden evidence from firm level data in china
The Singapore Economic Review, 2017Co-Authors: Xiaohan Guo, Deming Luo, Xiangrong JinAbstract:Firms’ behaviors are not only affected by their Taxation Burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of Tax Burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s Tax Burden in three ways, the value-added Tax (VAT) Burden, the corporate income Tax (CIT) Burden, and the total Tax Burden. By using a Hausman–Taylor estimation, we find: (1) The CIT Burden is positively correlated to the size, while other two Tax Burdens are not; (2) Both the VAT Burden and the total Tax Burden of SOEs are significantly heavier than those of non-SOEs, while the CIT Burden shows the exactly opposite effect; (3) Exporters have a remarkably lower Tax Burden than non-exporters for all three Tax Burden measures; and (4) The western region and particularly the central region have lighter Tax Burden than the eastern region for all three Tax b...
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the heterogeneous Tax Burden evidence from firm level data in china
Social Science Research Network, 2016Co-Authors: Xiaohan Guo, Deming Luo, Xiangrong JinAbstract:Firms’ behaviors are not only affected by their Taxation Burden level, but also their differences from each other. In this paper, we use Chinese Industrial Enterprises Database (CIED) to investigate the relationship between firms’ heterogeneity of Tax Burden and firms’ characteristics, such as size, ownership, exportation and location. We measure a firm’s Tax Burden in three ways, the value-dded Tax (VAT) Burden, the corporate income Tax (CIT) Burden, and the total Tax Burden. By using a Hausman–Taylor estimation, we find: (1) The CIT Burden is positively correlated to the size, while other two Tax Burdens are not; (2) Both the VAT Burden and the total Tax Burden of SOEs are significantly heavier than those of non-SOEs, while the CIT Burden shows the exactly opposite effect; (3) Exporters have a remarkably lower Tax Burden than non-exporters for all three Tax Burden measures; and (4) The western region and particularly the central region have lighter Tax Burden than the eastern region for all three Tax Burden measures. We also provide empirical evidence and policy suggestions for continuing to proceed with the structural Tax reduction and the structural fiscal reform in China.
