Search results

The cost of compliance is an essential variable to consider when administering a tax system. One recent study estimates that the yearly federal tax compliance burden in the US exceeds $431 billion dollars, and this cost does not include the potential greatest cost of all – changes in taxpayer behavior that reduces economic efficiency (Laffer, Winegarden, & Childs, 2011). One example of such behavior is the renunciation of US citizenship due to the impact of the Foreign Account Tax Compliance Act (FATCA) reporting requirements. Using this context, our study examines how FATCA compliance costs can affect taxpayer behavior in a manner that reduces economic efficiency. We collected responses from 197 experienced US taxpayers living in the US. Our study finds that when tax compliance costs are high, taxpayers may be more likely to renounce their citizenship to avoid FATCA reporting requirements. We further learn that tax compliance costs may increase the likelihood of citizenship renunciation even in the presence of a minimal US tax burden. Supplemental mediation analysis demonstrates that one's perceived fairness of compliance does not mediate the effect of high compliance costs on a taxpayer's renunciation decision; however, one's perceived fairness of compliance and fear of sanctions, collectively, partially explain the effect of tax burden on the renunciation decision. In addition, we find that ethics, the perceived probability of detection, and average income level affect the decision to renounce citizenship. Our findings suggest broader impacts of tax policy and provide a foundation for future research to further explore domestic and foreign tax compliance behaviors.

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.

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.

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.

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.

To answer the following research questions: (1) What is the tax burden, on average, as a percentage of the generated revenues of companies in BiH? (2) Are there differences in the load level in relation to: (a) company size, (b) company location, (c) company age, (d) hiring of tax advisors and other external consultants on CIT issues and (e) company business activity.

In order to answer the research questions asked, quantitative analysis of primary data purposefully collected for this research will be used. The empirical part of the paper relies on the collection of primary data through survey using the method of stratified random sampling from the population of SMEs enterprises registered in BiH focusing only on FBIH and the RS. Regression analysis (OLS model) was used to estimate results.

Average share of tax compliance costs in SME revenues is 8.3%. Tax compliance costs are regressive, dependent on company age, location and business activity as well as on whether companies hire external consultants.

The chosen research method is a telephone survey, with the aim of encouraging respondents to give answers to the questions asked, using experienced interviewers from the market research agency. However, the use of this method is not without limitations, and they refer to the time-limited duration of telephone interviews that require shorter questions, and pre-prepared answer options to make it easier for respondents to give answers. One of the challenges is the fact that most respondents do not want to talk to strangers over the phone and answer unknown numbers. This risk was especially pronounced because the topic of the research is related to CIT, so many respondents expressed doubts about the purpose of the question, refusing to provide accurate data. This risk was mitigated by asking questions to include certain scales in terms of income, number of employees and gross wages, to make respondents feel free to share this type of sensitive data with interviewers.

First, the analysis of this paper showed that specific, identified factors contribute to, or directly affect, the level of the tax compliance costs of corporate income tax in BiH. Second, there is currently no comprehensive analysis of the tax burden in BiH in the literature that would quantify the tax compliance costs, both at the BiH level and at the entity level. Based on the aforementioned, it is necessary to design a fiscal policy in such a way as to eliminate or, in cases where this is not possible, reduce the tax burden on the private sector in general. Based on the data collected in this research, fiscal policy should pay special attention to the tax treatment of start-ups, small and medium-sized enterprises and enterprises operating in services and other sectors by introducing tax incentives that will be of a general nature and that will be applicable to multiple activities and categories of enterprises, in order to eliminate the current negative effects of existing incentives aimed at predefined categories. Finally, it would be necessary to consider the possibility of closer and more extensive harmonization of entity tax laws, in accordance with international practices and accounting standards - in order to reduce the difference in burden primarily between entities, which would facilitate foreign investors and contribute to increased competitiveness in the domestic, regional and ultimately the global market. It would be desirable to use harmonization as a tool in support of promoting the competitiveness of the country in order to attract and maintain the level of foreign direct investment.

There is currently no comprehensive analysis of the tax burden in BiH in the literature that would quantify the tax compliance costs, both at the BiH level and at the entity level.

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.

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.

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.

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.

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.

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.

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.

This study aims to understand the interaction between tax fairness perceptions, equitable tax burden distribution and tax compliance within Morocco’s unique socio-economic context, with the goal of uncovering strategies to enhance tax compliance.

Using the Delphi method, this study engaged tax experts in the Moroccan context to explore the impact of taxpayers’ perception of fairness, tax rates and tax burden on compliance. Their responses were gathered and analyzed with the aid of IRaMuTeQ software, which helped the authors identify themes relevant to the research question.

The preliminary results indicate a positive correlation between perceptions of tax fairness and compliance behavior, corroborating earlier studies conducted in different contexts. Notably, a substantial majority of Moroccan taxpayers perceive the current tax system as inequitable, deeming tax rates too high and the tax burden unfairly distributed among various taxpayer categories. This perception potentially influences their voluntary tax compliance behavior.

The findings have significant policy implications for the Moroccan Government and stakeholders. They suggest that by improving tax fairness, particularly by aligning tax assessment and payment modalities for employees, civil servants and small to medium enterprises, policymakers can encourage higher voluntary tax compliance, thereby potentially enhancing the efficiency of the Moroccan tax system.

This study adds to the existing body of knowledge by exploring the dynamics of tax fairness and compliance behavior in Morocco, a context which has been significantly understudied.

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

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.

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.

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

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

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.