Impact of Direct Taxation on Economic Growth: Empirical Evidence Based on Panel Data Regression Analysis at the Level of Eu Countries

Through fiscal policy, the government can influence businesses and individuals in order to regulate their behaviour. The research used panel data from all 27 EU countries covering the period 2008–2020 to investigate the impact of direct taxation on economic growth at the level of two main clusters of countries concerning fiscal efficiency. Therefore, the analysis employed cluster methods to classify the main EU countries in both groups of countries with a high level of fiscal efficiency and those with a rather limited level of fiscal efficiency. The study employs fixed effect models and dynamic GMM methods to investigate the effect of direct taxation components (personal and corporate income taxes) on economic growth. The analysis also considers the informal economy's role in relation to the official economy. The empirical results revealed that corporate income taxes significantly negatively impact economic growth for both clusters of high- and limited fiscal efficiency countries. Additionally, personal income tax was associated with lower economic growth for countries in the limited fiscal efficiency group. Thus, from the perspective of policymakers, lowering direct taxation can increase disposable income, stimulate consumption and economic growth, encourage investment leading to job creation, increase competitiveness, and reduce tax evasion and avoidance, thereby leading to a more efficient tax system.

The Morning After: A Post-Binge Federal Shadow Budget for 2023

The combination of growth-enhancing and fiscally prudent policies will redress the damage COVID has done to federal fiscal capacity, and provide more resources Canadians will need to address an ageing population, climate change and the energy transition, subsequent pandemics, and challenges we do not yet foresee. The Main Estimates for the 2023/24 fiscal year will follow Public Sector Accounting Standards, and will appear before the start of the fiscal year, after appropriate vetting by the Treasury Board. Notwithstanding the federal government's rhetorical emphasis on global warming as an existential threat that requires costly curtailments of fossil fuel production and consumption, the purported economic costs of warming do not figure in its projections, nor do the fiscal costs of adapting and fixing the damage. The response to global warming is likely to be a drag on economic growth (Canadian Climate Institute 2022).

Digital Financial Inclusion, Digital Financial Services Tax and Financial Inclusion in the Fourth Industrial Revolution Era in Africa

The digital economy has risen dramatically in the global environment, and many developing countries, including African countries, have seen a spike in digital activity over recent years. The digital economy’s growth has resulted in an increase in digital financial services (DFS) in Africa and other developing regions. Since many African countries are under pressure to raise domestic revenue, taxing the digital economy has become a viable option. As a result, this study attempted to respond to the following questions: first, what is the link between DFS growth and digital inclusion in African countries? Second, what justifies the imposition of DFS taxes in Africa? Third, what are the potential consequences of DFS taxes in African countries? Using secondary data from the literature review and document analysis, a systematic technique for assessing or evaluating printed and electronic documents, and computer-based and internet-transmitted material, the study discovered that digital financial inclusion is driving financial inclusion on the African continent. The study also found that, despite several negative consequences associated with the growth of the digital economy, most African economic activities are informal and are being aided by various digital financial services. Therefore, it is equally crucial that when adopting digital finance taxes, care is taken to avoid excluding low-income earners from the financial sector and to take note of the usage, affordability, and distortive implications of taxation.

How Do Firms Respond to Reduced Labor Costs? Evidence from the 2007 Swedish Payroll Tax Reform

One way for policymakers to reduce labor costs and stimulate the recruitment of marginalized groups of labor in a highly unionized economy is to lower payroll taxes. However, the efficiency of this policy instrument has been questioned, and previous evaluations have mostly found small employment effects for such reforms. We investigate the effects of a payroll tax cut in Sweden that decreased firms’ labor costs in relation to the number of young employees that they had employed when the reform was implemented in 2007. We find that most firms received small labor cost savings as a result of the reform, but those that received larger cost savings increased their number of employees significantly more than firms that received no, or minor, labor cost savings. Our findings also suggest that the payroll tax cut increased the total wages paid to incumbent workers, but the wage effect was too small to offset the positive extensive-margin employment effect of the reform. In total, we find that the Swedish payroll tax reform created 18,100 jobs over the period 2006–2008;most of these jobs were within the targeted group of young employees.

Fiscal adjustments: lessons from and for the Baltic states

This paper aims to investigate the effects of various fiscal policy measures for small and open economies by analysing the implications of fiscal shocks in the Baltic countries based on data for the period from 1995 to 2018. For this purpose, we have chosen structural VAR estimation methods following Blanchard, O., & Perotti, R. (2002). An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output. The Quarterly Journal of Economics, 117(4), 1329–1368, approach and relied on local projections for robustness checks. We find that the impact on growth of direct taxes, government consumption and public investment is strong and persistent in the analysed cases. Although the responses of FDI to fiscal shocks are less consistent as compared to output, in most cases, we get strong and persistent negative reactions in FDI to increasing tax burden.

Enhancing Returns from Opportunity Zone Projects by Combining Federal, State, and Local Tax Incentives to Bolster Community Impact

Skeptics may call the federal Opportunity Zone (OZ) program a tax dodge for the wealthy, but there is strong bipartisan support for the program at the federal, state, and local levels. Furthermore, underserved communities (and the small businesses therein) could benefit from billions of dollars in new investments in long-term capital that they might not have received through conventional bank loans or government programs-especially given the current unique and challenging economy. The findings noted in this article are based on the authors' presupposition that President Biden's proposed tax increases have increased interest in the deferral and ultimate tax exemption aspects of the OZ program, and investment momentum is likely to continue for the foreseeable future. The authors' data and interviews show that because the OZ program is not structured for real estate speculators and flippers to trade during the OZ reinvestment period, the long-term investment requirement of the OZ program makes it stand out from other place-based incentive programs that have generally failed to live up to expectations. Furthermore, the authors dispute the notion that the OZ program only benefits real estate investors. They believe that OZ investments have funded hundreds of clean energy projects, biotechnology and medical infrastructure projects, active businesses, solar energy projects, and many successful public-private partnerships. The authors also show that Congress placed no limits on the amount of federal, state, and local tax benefits, grants, or other incentives that can be layered into the OZ investment. As a result, OZ structures are being used in combination with Low-Income Housing Tax Credit (LIHTC) projects, New Market Tax Credit (NMTC) projects, Historical Tax Credit (HTC) projects, research and development, solar energy, cost segregation, and other alternative energy projects that generate accelerated depreciation and credits. This is generally referred to as "twinning" of various tax programs. The authors anticipate further extensions of the OZ investment window that will give taxpayers and fund managers sufficient time to make important investment decisions that result in significant economic impact for underserved communities. How many other economic development initiatives can generate win-win results for underserved communities, municipalities, small businesses, and investors alike?

Editorial for Special Issue: “Feature Papers of Forecasting 2021”

In further detail, the Theta method (manipulation of local curvatures), Multiple Temporal Aggregation (MTA), bootstrapping, Forecasting with Sub-seasonal Series (FOSS) and forecasting with multiple starting points are discussed and compared in terms of how information is extracted from data, the computational cost and the performance. [...]the concept of the “wisdom of the data” is presented, explaining how a proper data manipulation can translate into improved forecast accuracy by combining forecasts carried out from different perspectives on the same data. [...]an unsupervised clustering based on k-means algorithm applied to all possible PV+BESS (Battery Energy Storage System) configurations allowed the researchers to identify the family of feasible solutions which, as expected, was characterized by a low payback time and a low number of residual cycles. According to the authors, the developed model can even be generalized to different types of consumption, such as electricity and gas. The proposed method is tested on estimating the Loop Current (LC) measured in the Gulf of Mexico between 2009 and 2011 at multiple spatial and temporal scales, where an RMSE (Root Mean Square Error) lower than 0.05 cm/s and a correlation coefficient of 0.6 were presented. [...]the model presented a useful forecast period, hence the time interval after which the forecast significantly diverges from the observed motion field, larger than 4 days.

Covid-19: Prospering Industries & Oversize Management

With COVID-19, many businesses have failed, while other industries and corporations have seen profits increase, and are likely to continue to do so postpandemic, in line with the trend of the oversize economy. Coronavirus 2019 has caused a major economic shock, in addition to its tremendous impact on global health, pushing the biggest corporations towards an outburst of the new, basic drivers of global capitalism (Health;Energy;Food;Communication). That is, the pillars of global competition that start from an oversize management in order to fix the competitive landscapes of large corporations.

Employment Taxes in Crisis: In Practice, Enforcement, and Insolvency

When President Trump permitted the Service to defer employees' Social Security taxes in 2020 as a result of COVID-19, he claimed it was a "modest, targeted action." The call was not unprecedented. Congress had already deferred the employer portion of Social Security taxes through the end of 2020. Nevertheless, tax holidays for U.S. employment taxes are rare, despite relatively frequent legislative change to payroll taxes. More than 75 statutory changes have been made to payroll taxes since they were first enacted in 1935, with almost all changes increasing rates, the taxes' reach, or the government's enforcement power. By examining legislative developments and their portrayal in the New York Times and Wall Street Journal, this Article documents the changes themselves, how they were presented by the government, and how the public reacted to the change. Exploring the historical development of payroll taxes focuses on the impact of changes to payroll taxes and, through its exploration, also forecasts the likelihood of future changes to the payrolltax system and Social Security funding.

Tax Sustainability: Tax Transparency in Latin America and the Chilean Case

This study is based on a sample of the thirty Chilean companies with the highest stock presence and which demonstrate opacity problems in their tax sustainability related to the GRI 207 standard available since 2019 (which emphasizes the disclosure of tax strategies to stakeholders, especially as regards any links with their small and medium-sized enterprises (SMEs)). The study also explores the literature related to tax transparency and its evolution in Latin America. Significantly different performances were found among the tax sustainability reports. The reasons for these differences are related to the fact that some demand simple declarations of principles, while others require both reporting of evidence in front of the interest groups and revealing of the tax strategy. As a result, taxpayers seem to use their corporate social responsibility activities more to moderate reputation risk than to aim at tax transparency. At the same time, the findings reveal that the actions toward tax transparency which have defined the tributary administrations of Latin American countries since the 2018 Punta del Este Global Forum do not consider the possibility of public disclosure. In this sense, the evidence highlights the need for Latin American policymakers to introduce, at the normative level, integrated tax transparency cooperation mechanisms between state administrations and regulated companies.

Bridging the Gap: A Picture of State Transportation Funding in the United States

For years, states have struggled with chronic gaps between transportation revenues and investment needs due to aging infrastructure, cost inflation, and declining motor fuel tax revenue. States have confronted constrained resources in the face of changing demographics and growing demand and have, as a result, developed a wide array of approaches to providing transportation funding and financing options including state fuel taxes, vehicle fees, sales taxes, and tolls. Shifts in the makeup of state highway program revenue sources over the past several years reflect changing dynamics: bond revenue and state revenue have increased while highway user fees and federal investments have declined. Here, Howard discusses how states are advancing revenue measures and options for the future.

Public Debt Frontier: A Python Toolkit for Analyzing Public Debt Sustainability

This study proposes a synthetic visual indicator with which to perform debt sustainability analysis using dynamic general equilibrium models. In a single diagram, we summarized the general equilibrium relationships among economic activity, government budget, and the maximum amount of sustainable public debt. Then, we measured sustainability using the distance of actual debt from the model-consistent maximum debt. This indicator can be implemented with any DSGE model;as a backing theory, we used a neoclassical model augmented with endogenous tax revenues, disaggregated public spending, different production technologies for public and private goods, non-atomistic wage setters in public labor (unions), and a fully specified maturity curve for public bonds. We provided an example of its usage using the case of Greece during the last public debt crisis. To perform the numerical analysis, we developed original software, whose advantage is allowing an audience without expertise in DSGE models to perform general equilibrium debt sustainability analyses without requiring an understanding of the technicalities of DSGE models.