Progressive Tax-like Effects of Inflation: Fact or Myth? The U.S. Post-war Experience
Matthias Wieschemeyer, Bernd Süssmuth
IWH Discussion Papers,
No. 33,
2017
Abstract
Inflation and earnings growth can push some tax payers into higher brackets in the absence of inflation-indexed schedules. Moreover, inflation may affect the composition of individuals’ income sources. As a result, depending on the relative tax burden of labour and capital, inflation may decrease or increase the difference between before-tax and after-tax income. However, whether some and if so which percentiles of the income distribution net benefit from inflation via taxation is a widely unexplored question. We make use of a novel dataset on U.S. pre-tax and post-tax income distribution series provided by Pike ty et al. (2018) for the years 1962 to 2014 to answer this question. To this end, we estimate local projections to quantify dynamic effects. We find that inflation shocks increase progressivity of taxation not only contemporaneously but also with some repercussion of several years after the shock. While particularly the bottom two quintiles gain in share, it is not the top but the fourth quintile that lastingly loses.
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Predicting Earnings and Cash Flows: The Information Content of Losses and Tax Loss Carryforwards
Sandra Dreher, Sebastian Eichfelder, Felix Noth
Abstract
We analyse the relevance of losses, accounting information on tax loss carryforwards, and deferred taxes for the prediction of earnings and cash flows up to four years ahead. We use a unique hand-collected panel of German listed firms encompassing detailed information on tax loss carryforwards and deferred taxes from the tax footnote. Our out-of-sample predictions show that considering accounting information on tax loss carryforwards and deferred taxes does not enhance the accuracy of performance forecasts and can even worsen performance predictions. We find that common forecasting approaches that treat positive and negative performances equally or that use a dummy variable for negative performance can lead to biased performance forecasts, and we provide a simple empirical specification to account for that issue.
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19.12.2017 • 40/2017
The medium-term economic development in Germany from 2017 to 2022 and opportunities for fiscal policies of a new federal government
Due to the cyclical upswing in Germany, in case of unaltered legislation, the general government would achieve considerable budget surpluses in the years ahead. As a consequence, there is large fiscal scope for a new federal government. With the fiscal policy simulation model of the Halle Institute for Economic Research (IWH) – Member of the Leibniz Association, the macroeconomic effects of various fiscal policy measures are analysed. The results show that additional government expenditures, like the expansion of social benefits, do have a stronger effect on GDP than revenue cuts, like for instance tax reliefs. „Due to the already high capacity utilisation, revenue cuts seem to be advantageous from a business cycle perspective. Moreover, a reduction of the high taxes and charges on labour would, in contrast to an expansion of social benefits, have a positive effect on potential output“, says Oliver Holtemöller, head of the Department of Macroeconomics and IWH vice president.
Oliver Holtemöller
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Does Social Capital Matter in Corporate Decisions? Evidence from Corporate Tax Avoidance
Iftekhar Hasan, Chun-Keung (Stan) Hoi, Qiang Wu, Hao Zhang
Journal of Accounting Research,
No. 3,
2017
Abstract
We investigate whether the levels of social capital in U.S. counties, as captured by strength of civic norms and density of social networks in the counties, are systematically related to tax avoidance activities of corporations with headquarters located in the counties. We find strong negative associations between social capital and corporate tax avoidance, as captured by effective tax rates and book-tax differences. These results are incremental to the effects of local religiosity and firm culture toward socially irresponsible activities. They are robust to using organ donation as an alternative social capital proxy and fixed effect regressions. They extend to aggressive tax avoidance practices. Additionally, we provide corroborating evidence using firms with headquarters relocation that changes the exposure to social capital. We conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance.
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Debt Brake Will Intensify Bracket Creep Problem
Martin Altemeyer-Bartscher, Götz Zeddies
Wirtschaftsdienst,
No. 2,
2017
Abstract
Geringfügige Steuermehrbelastungen, die auf die kalte Progression bei der Einkommensteuer zurückzuführen sind, werden vom Steuerzahler kaum wahrgenommen. Überschreiten die kumulierten Mehrbelastungen allerdings nach einigen Jahren eine kritische Schwelle, entsteht gewöhnlich ein politischer Druck für die Korrektur der kalten Progression. Im Unterschied zu konjunkturbedingten Einnahmeschwankungen wird dieser Einnahmezyklus in den Regelungen zur Schuldenbremse nicht berücksichtigt. Eine Indexierung des Steuertarifs, d. h. eine automatische Korrektur der kalten Progression, könnte derartige Schwankungen verhindern.
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Financial Transaction Taxes: Announcement Effects, Short-run Effects, and Long-run Effects
Sebastian Eichfelder, Mona Noack, Felix Noth
Abstract
We analyze the impact of the French 2012 financial transaction tax (FTT) on trading volumes, stock prices, liquidity, and volatility. We extend the empirical research by identifying FTT announcement and short-run treatment effects, which can distort difference-in-differences estimates. In addition, we consider long-run volatility measures that better fit the French FTT’s legislative design. While we find strong evidence of a positive FTT announcement effect on trading volumes, there is almost no statistically significant evidence of a long-run treatment effect. Thus, evidence of a strong reduction of trading volumes resulting from the French FTT might be driven by announcement effects and short-term treatment effects. We find evidence of an increase of intraday volatilities in the announcement period and a significant reduction of weekly and monthly volatilities in the treatment period. Our findings support theoretical considerations suggesting a stabilizing impact of FTTs on financial markets.
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Kommentar: Für mehr Ehrlichkeit in der Rentendebatte
Martin Altemeyer-Bartscher, Oliver Holtemöller
Wirtschaft im Wandel,
No. 6,
2016
Abstract
Durch die steigende Lebenserwartung und die geringen Geburtenraten wird in Zukunft eine abnehmende Zahl von Erwerbstätigen in Deutschland die Rentenleistungen für eine steigende Zahl von Rentnern finanzieren müssen. Während im Jahr 2016 auf 100 Beschäftigte 53 Rentner kommen, werden es im Jahr 2050 mehr als 80 Rentner sein. Diese Entwicklung führt zu einer zunehmenden Verunsicherung in der Bevölkerung hinsichtlich der zukünftigen Leistungsfähigkeit der umlagefinanzierten Altersversorgung. Auf diese Verunsicherung antwortete die Politik kürzlich wieder mit der Formulierung einer so genannten doppelten Haltelinie. Diese beinhaltet eine untere Grenze für das Sicherungsniveau und eine obere Grenze für den Beitragssatz.
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Bracket Creeps: Bane or Boon for the Stability of Numerical Budget Rules?
Martin Altemeyer-Bartscher, Götz Zeddies
IWH Discussion Papers,
No. 29,
2016
Abstract
As taxpayers typically pay low attention to a small inflation-induced bracket creep of the income tax, policy-makers tend to postpone its correction into the future. However, the fiscal illusion fades away and political pressure for a tax relief arises since after some years the cumulative increase of the average tax rate exceeds a critical threshold. Using Germany as an example, this paper shows that bracket creeps can provoke revenue cycles in public budgets hindering governments’ compliance with the numerical budget rules. An indexation of the tax tariff could prevent such fluctuations and thus provides a favourable framework for the debt rule.
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Taxing Banks: An Evaluation of the German Bank Levy
Claudia M. Buch, Björn Hilberg, Lena Tonzer
Journal of Banking and Finance,
November
2016
Abstract
Bank distress can have severe negative consequences for the stability of the financial system. Regimes for the restructuring and resolution of banks, financed by bank levies, aim at reducing these costs. This paper evaluates the German bank levy, which has been implemented since 2011. Our analysis offers three main insights. First, revenues raised through the levy were lower than expected. Second, the bulk of the payments were contributed by large commercial banks and by the central institutions of savings banks and credit unions. Third, for those banks, which were affected by the levy, we find evidence for a reduction in lending and higher deposit rates.
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