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Open Access
Article
Publication date: 27 March 2020

Ferdi Celikay

The tax burden, defined as the ratio of the collected taxes in a particular period against the total product, is commonly used to determine the effect of fiscal and tax

4017

Abstract

Purpose

The tax burden, defined as the ratio of the collected taxes in a particular period against the total product, is commonly used to determine the effect of fiscal and tax policies on the socioeconomic structure. The purpose of this study is to examine how the changes in some macroeconomic indicators affect the tax burden.

Design/methodology/approach

System generalized method of moments approach is used for 34 Organisation for Economic Co-operation and Development (OECD) members in the period of 1993-2016.

Findings

Based on the research findings, variables such as income per capita, foreign trading volume, the capacity of employment, unemployment and economic share of industry sector effect tax burden in a statistically significant and positive direction. The reason that lies behind the positive effect of unemployment on tax burden is the fact that the sense of social state is not abandoned. Thus, it is predicted that the state will increase public transfer expenditures in the short term due to unemployment, this increase will impose a financial burden on the public sector both in the medium and long term and finally, there will be an increase in the tax burden.

Originality/value

Results in the literature suggest that there are many reasons for increasing tax burden such as socio-economic development, financial and organizational structure and the globalization process. However, according to this study, it seems that gross domestic product per capita, the size of the industry sector, openness, employment capacity and unemployment rate also have a positive and significant effect on tax burden in the long run. Ultimately, these results demonstrate that tax burden, one of the most important indicators of the public sector size in the sample of the states and period in hand, is influenced positively by all independent variables and increases slightly but surely. These results suggest that the tax state is still a determinative factor in the socioeconomic field within its taxation tools.

Details

Journal of Economics, Finance and Administrative Science, vol. 25 no. 49
Type: Research Article
ISSN: 2077-1886

Keywords

Book part
Publication date: 9 December 2020

B. Anthony Billings, Buagu N. Musazi, William H. Volz and Deborah K. Jones

This chapter evaluates the effectiveness of states' research and development (R&D, used to represent creditable research expenses) tax credits. Prior studies report mixed…

Abstract

This chapter evaluates the effectiveness of states' research and development (R&D, used to represent creditable research expenses) tax credits. Prior studies report mixed results on the effect of state R&D tax credit incentives. Generally, such studies consider the influence of state R&D tax credits by applying the statutory income tax and R&D credit tax rates. We reexamine the effect of a state's entire tax burden instead of the statutory tax rates in moderating the effectiveness of a state's R&D tax credit incentives. After controlling for several nontax factors, such as the workplace environment, political environment, and workforce education levels in a regression analysis during the 2010–2013 period in 50 states, we find that statewide private-sector R&D spending is a positive function of the R&D tax credit and this effect increases with the overall level of the state tax burden. We attribute this finding to the fact that high tax burdens increase the present value of the R&D tax credits.

Article
Publication date: 31 March 2008

Cynthia Sneed and John Sneed

During the 2004 presidential campaign, the Kerry campaign claimed that the federal income tax cuts passed between 2001 and 2004 shifted the burden of financing the federal…

1115

Abstract

Purpose

During the 2004 presidential campaign, the Kerry campaign claimed that the federal income tax cuts passed between 2001 and 2004 shifted the burden of financing the federal government from upper‐class to middle‐class taxpayers. The purpose of this paper is to determine whether the claim made by the Kerry campaign is valid.

Design/methodology/approach

The assumptions made by the Kerry campaign in analyzing the data in the report Effective Federal Tax Rates Under Current Law, 2001‐2014 prepared by the Congressional Budget Office (CBO) were analyzed. It was determined that their analysis was flawed in the way they established their comparisons. The analysis was adjusted, correcting the identified flaws.

Findings

After adjusting for the flaws in the analysis by the Kerry campaign, it was determined that the tax cuts actually increased the percentage of taxes paid by the wealthiest taxpayers. Also, if the cuts are not extended, the percentage paid by the wealthiest taxpayers will decrease.

Originality/value

The importance of this paper is not in finding that a political party would manipulate economic data in an attempt to win an election, as this is expected in politics. The larger concern is that the CBO, a nonpartisan organization, validated the claims made by the Kerry campaign. If a nonpartisan organization is going to take a position on an issue related to politics, they need to be sure that the analysis is valid.

Details

Management Research News, vol. 31 no. 3
Type: Research Article
ISSN: 0140-9174

Keywords

Book part
Publication date: 9 November 2004

Ted D. Englebrecht and Timothy O. Bisping

Prior studies on the social security tax have focused on it being regressive; a system that is detrimental to savings in the United States; a system that will bankrupt…

Abstract

Prior studies on the social security tax have focused on it being regressive; a system that is detrimental to savings in the United States; a system that will bankrupt itself; and a host of economic inquiries examining labor market and product demand elasticities and the impact of the substitution effect. However, there is scant evidence on the shifting mechanisms employed by the owners of millions of small businesses in the United States. As a result, this study revisits the issue by surveying 4,431 small businesses in Arkansas, Louisiana and Mississippi (ArkLaMiss). Results indicate, in the ArkLaMiss area, that the largest share of the tax burden is borne by customers. When compared to past literature, a relatively larger portion of the incidence of payroll taxes is likely to fall on employees in the ArkLaMiss, as opposed to the burden being borne by firms and customers. Also, stronger anti-tax sentiment was noted in the ArkLaMiss as compared to prior literature. Little support was found for the proposition that firm size impacts the incidence of taxation. On the other hand, statistical analysis indicates that the industry within which a firm operates was influential in the incidence of taxation. Moreover, in the sample, the banking/financial industry passed the largest percentage of the tax on to employees, the public accounting profession passed the largest percentage on to customers, and the legal profession bore the largest share of the tax in the form of reduced profit.

Details

Advances in Taxation
Type: Book
ISBN: 978-0-76231-134-7

Article
Publication date: 1 March 1990

A. McKee

Justice in taxation depends on implementing the principle ofproportionately equal burden on all, where one has no choice but to usethe devices of cardinally measurable…

Abstract

Justice in taxation depends on implementing the principle of proportionately equal burden on all, where one has no choice but to use the devices of cardinally measurable utility and interpersonal comparisons. Despite levies by multiple levels of government and subdivision into different taxes, the overall principle applies of equal burden. This stands despite connecting up with two related enquiries – equity in allocating public goods and services, and fair distribution of income and wealth after taxation and return of public goods. The elements introduced into the argument are not new, but they are fitted into an overview of just allocation of direct and indirect taxation. While the principles of equity stand in distributing the burden of taxation and benefits of public goods, their translation into practice depends on democratic debate and decision in the free society, so that it is a never‐ending exercise evolving along with the economy and society in question.

Details

International Journal of Social Economics, vol. 17 no. 3
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 20 June 2022

Hart Hodges and Brady Flynn Anderson

The purpose of this paper is to determine whether the way competitiveness is measured matters, as well as to analyze the relationship between tax burden and economic…

Abstract

Purpose

The purpose of this paper is to determine whether the way competitiveness is measured matters, as well as to analyze the relationship between tax burden and economic competitiveness using a variety of model specifications.

Design/methodology/approach

This paper uses statistical models aimed at finding the relationship between taxes and different measures of economic competitiveness, such as gross domestic product per capita, employment and a third-party competitiveness index. Other variables are also considered, and statistical procedures such as lag specifications and “white period” errors are used to address problems of endogeneity and serial correlation.

Findings

The models find no robust relationship between taxes and competitiveness. Certain models find correlations between the tax burden of specific income groups with economic competitiveness, but these vary in direction and are difficult to interpret. This follows past research, which shows different results depending on the period analyzed, measure of competitiveness and other variables used.

Originality/value

This paper looks at many of the different measures of competitiveness, control variables and periods that are used in the previous literature and shows how any changes to these model specifications cause inconsistent results. This paper highlights that, because results can vary greatly depending on the model, researchers and policymakers must be careful when drawing any conclusions from relationships between taxes and economic competitiveness.

Details

Competitiveness Review: An International Business Journal , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1059-5422

Keywords

Article
Publication date: 13 April 2015

Dmitriy Krichevskiy and Thomas Snyder

– The purpose of this paper is to test the effects of government policies on entrepreneurial activity within the 50 US states.

622

Abstract

Purpose

The purpose of this paper is to test the effects of government policies on entrepreneurial activity within the 50 US states.

Design/methodology/approach

Using panel data and a fixed-effects model, the authors examine the determinants of the nominal establishment entry rate, the nominal establishment exit rate, and the net establishment entry rate. To measure government policy, the authors use the Economic Freedom of North America (EFNA) index published by the Fraser Institute. The authors use both the overall index and its components. The authors also use the state and local tax burden published by the Tax Foundation.

Findings

The authors find that a smaller government is associated with a net increase in business establishments. A freer labor market is also associated with a net increase in business establishments. However, the relationship between the tax burden and entrepreneurship is more complex. Using a measurement of the tax burden from the Fraser Institute, the authors find that an increase in taxes is associated with a net decrease in businesses, but the measurement from the Tax Foundation suggests that an increase in taxes is associated with a net increase in businesses.

Research limitations/implications

The results can help policy makers recognize the effects of expenditure and regulation on business formation.

Practical implications

However, the results do not send a clear message on the effects of taxes on entrepreneurship.

Originality/value

The contribution to the literature is the examination of the effect of the components economic freedom on net business entry in the USA, along with comparing the effects of two measurements of tax burden on net business entry.

Details

Journal of Entrepreneurship and Public Policy, vol. 4 no. 1
Type: Research Article
ISSN: 2045-2101

Keywords

Abstract

Details

Funding Transport Systems
Type: Book
ISBN: 978-0-08-043071-3

Abstract

Details

Environmental Taxation and the Double Dividend
Type: Book
ISBN: 978-1-84950-848-3

Article
Publication date: 13 June 2008

Nathalie Chusseau and Joël Hellier

The paper seeks to analyse the impact of different public policies on inequality, unemployment, growth and the tax burden.

1298

Abstract

Purpose

The paper seeks to analyse the impact of different public policies on inequality, unemployment, growth and the tax burden.

Design/methodology/approach

A dynamic general equilibrium model is built, in which growth is driven by endogenous technical progress, to analyse the impacts of several policies (minimum wage, redistribution and R&D subsidies financed by an income tax).

Findings

All policies except pure redistribution are better than non‐intervention in terms of growth. The authors distinguish three major policy patterns. The Anglo‐Saxon model is characterised by high growth, high inequality, low unemployment and a low tax burden. The Nordic model combines high growth, low inequality and low unemployment, and a high tax burden. The Continental European model puts together medium inequality and a medium tax burden, and higher long‐term growth is paid for by high unemployment.

Research limitations/implications

The model could be extended by the introduction of educational policy.

Originality/value

The paper distinguishes three configurations that capture the main features of the developments in Anglo‐Saxon countries, Scandinavian countries, and Continental European countries in the 1990s. It thereby provides a general framework to analyse and compare these experiences.

Details

International Journal of Manpower, vol. 29 no. 3
Type: Research Article
ISSN: 0143-7720

Keywords

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