Topic
Tax efficiency
About: Tax efficiency is a research topic. Over the lifetime, 150 publications have been published within this topic receiving 1792 citations.
Papers published on a yearly basis
Papers
TL;DR: In this paper, the authors attempt to answer the questions frequently asked by investors about how ETFs work, what sectors of the market are good candidates for ETFs and what sectors are not, why the expense ratios tend to be low, and how most of the funds manage to avoid significant capital gains distributions.
Abstract: The phenomenal growth of exchange–traded funds (ETFs) is a frequent topic in the financial press. These funds, with assets more than doubling each year since 1995, have been warmly embraced by most advocates of low–cost index funds. Vanguard, the leading advocate of index funds, has announced plans to add exchange–traded share classes to a number of its domestic index funds. Most of the press coverage has correctly noted the major advantages of ETFs—low–costs, intraday trading and high tax efficiency with no material premiums or discounts to the funds9 intraday net asset value. However, there is a fair degree of misunderstanding about how ETFs work, what sectors of the market are good candidates for ETFs and what sectors are not, why the expense ratios tend to be low, and how most of the funds manage to avoid significant capital gains distributions. In this article, the author attempts to answer these and other questions frequently asked by investors.
289 citations
TL;DR: This paper examined the impact of hedge fund activism on corporate tax avoidance and found that businesses targeted by hedge fund activists exhibit lower tax avoidance levels prior to hedge fund intervention, but experience increases in tax avoidance after the intervention.
Abstract: This paper examines the impact of hedge fund activism on corporate tax avoidance. We find that relative to matched control firms, businesses targeted by hedge fund activists exhibit lower tax avoidance levels prior to hedge fund intervention, but experience increases in tax avoidance after the intervention. Moreover, findings suggest that the increase in tax avoidance is greater when activists have a successful track record of implementing tax changes and possess tax interest or knowledge as indicated by their Securities and Exchange Commission (SEC) 13D filings. We also find that these greater tax savings do not appear to result from an increased use of high-risk and potentially illegal tax strategies, such as sheltering. Taken together, the results suggest that shareholder monitoring of firms, in the form of hedge fund activism, improves tax efficiency. JEL Classifications: G32; G34; H26. Data Availability: Data are available from sources identified in the text.
175 citations
TL;DR: In this article, the authors show that firms with higher levels of organizational capital exhibit higher tax avoidance and that shareholders view tax avoidance of high organizational capital firms as value-enhancing.
148 citations
Posted Content•
TL;DR: In this article, the authors evaluate the political economy and structural factors explaining the collection efficiency of the value added tax [VAT] in a panel of 44 countries over 1970-99 and find that a one standard deviation increase in durability of political regime, and in the ease and fluidity of political participation, increase the VAT collection efficiency by 3.1% and 3.6%, respectively.
Abstract: This paper evaluates the political economy and structural factors explaining the collection efficiency of the Value Added Tax [VAT]. We consider the case where the collection efficiency is determined by the probability of audit and by the penalty on underpaying. Implementation lags imply that the present policy maker determines the efficiency of the tax system next period. Theory suggests that the collection efficiency is impacted by political economy considerations – greater polarization and political instability would reduce the efficiency of the tax collection. In addition, collection is impacted by structural factors affecting the ease of tax evasion, like the urbanization level, the share of agriculture, and trade openness. Defining the collection efficiency of the VAT as the ratio of the VAT revenue to aggregate consumption divided by the standard VAT rate, we evaluate the evidence on VAT collection efficiency in a panel of 44 countries over 1970-99. The results are consistent with the theory - a one standard deviation increase in durability of political regime, and in the ease and fluidity of political participation, increase the VAT collection efficiency by 3.1% and 3.6%, respectively. A one standard deviation increase in urbanization, trade openness, and the share of agriculture changes the VAT collection efficiency by 12.7%, 3.9%, and - 4.8%, respectively. In addition, a one standard deviation increase in GDP/Capita increases the tax efficiency by 8.1%. Qualitatively identical results apply for an alternative measure of VAT collection efficiency, defined by the ratio of VAT revenue to GDP divided by the standard VAT.
124 citations
Posted Content•
TL;DR: In this paper, it is shown that allowing the deduction of work-related expenses has a strictly positive effect on tax efficiency only if two conditions hold jointly: (i) the expenses should be interpretable as real cost and (ii) the expense should be required for increasing taxable income.
Abstract: In this paper it is shown that allowing the deduction of work-related expenses has a strictly positive effect on tax efficiency only if two conditions hold jointly: (i) The expenses should be interpretable as real cost and (ii) the expenses should be required for increasing taxable income. Otherwise deductions are inefficient, neutral or ambiguous. Thus it is argued that the cost of commuting to work should not be deductible as commuting does not increase taxable income. The efficiency enhancing effect of deducting other expenses like educational ones or expenses for housework and child care is challenged on the grounds that these expenses are largely pecuniary costs.
115 citations
Related Topics (5)
Performance Metrics
| Year | Papers |
|---|---|
| 2021 | 5 |
| 2020 | 8 |
| 2019 | 18 |
| 2018 | 16 |
| 2017 | 5 |
| 2016 | 8 |