Tax Regimes and Capital Gains Realizations

This paper contrasts the individual capital gains realization behavior between progressive and proportional tax regimes. Using a longitudinal panel of over 288,000 individuals in Sweden, I exploit the 1991 tax reform in Sweden that changed progressive capital gains tax rates ranging from 12% to 80% to a proportional tax rate of 30%. Using the proportional tax system to control for non-tax reasons to realize capital gains, I show that individuals are highly responsive to capital gains tax incentives created by temporary income changes under a progressive capital gains tax. More specifically, I find that individuals with temporary negative (positive) income changes sell (hold) shares that they would hold (sell) in the absence of temporary tax incentives. Further, I show that high-income individuals are more tax sensitive than low-income individuals. This result indicates that low-income individuals facing temporary negative income changes could trade predominantly for non-tax reasons.     

Relative Value Relevance of Alternative Accounting Treatments for Unrealized Gains: Implications for the IASB

We investigate the relative value relevance of the alternative accounting methods for unrealized gains on investment properties in New Zealand (NZ). Using both the Likelihood‐ratio test and the F‐test, we find that, while preferred by the NZ standard setter, recognition of unrealized gains in the income statement is not superior to (or significantly different from) recognition of unrealized gains in revaluation reserve in terms of their value relevance. The results are robust to the different research methods we used. Our results have implications for the International Accounting Standards Board in terms of: (i) recognizing changes in fair values of investment properties in the income statement under the revised IAS 40: Investment Property in countries where “realization” refers to net income available for distribution; (ii) its intent to issue a standard on a single statement of comprehensive income; and (iii) its initiative to reduce or eliminate alternative accounting treatments for similar fact situations in its standards.     

Look before you leap: Why politicians may have a point to be hesitant about the gains from trade

Economists emphasize the welfare gains of unrestricted trade, but politicians worry about the income distribution effects of increased competition. We show that the welfare gains of a trade shock become ambiguous if inaccurate information hinders optimal income redistribution with distortionary policy instruments. To be sure about the net welfare outcome of a compensated trade shock, the government must know the size of the trade shock and the corresponding size of the policy instrument that is needed to generate a balanced budget. If this is not the case, politicians may have a point when being hesitant about the gains from trade.     

Asset allocation over the life cycle: How much do taxes matter?

We study the welfare effect of tax-optimizing portfolio decisions in a life cycle model with unspanned labor income and realization-based capital gain taxation. For realistic parameterizations of our model, certainty equivalent welfare gains from fully tax-optimized portfolio decisions are less than 2% of present financial wealth and lifetime income compared to a heuristic portfolio policy ignoring the taxation of profits (capital gains, interest and dividend payments). Compared to a heuristic portfolio policy that only ignores the realization-based feature of capital gain taxation and instead assumes mark-to-market taxation, these gains are less than 0.5%. That is, our work provides a justification for ignoring taxes in life cycle portfolio choice problems – a wide-spread assumption in that literature. However, if capital gains are forgiven at death (as in the U.S.), investors with strong bequest motives face substantial welfare costs when not tax-optimizing their portfolio decisions towards the end of the life cycle.     

城市居民财产性收入与贫富差距的实证分析

利用1988～2009年国家统计局全国入户调查数据,本文研究了我国城市居民财产性收入的规模、组成、变化以及其对收入差距的贡献。采用基尼系数的分解方法,将每年的收入差距分解到各个收入成分的贡献,并发现与其他收入形式相比,财产性收入分布的基尼系数是最高的,对总收入差距的贡献也在迅速扩大,这一现象值得重视。本文还分别对东、中、西部地区进行了分析,发现财产性收入主要集中在东部地区。     

The efficiency of interprovincial migration in Canada, 1961-1978

A programming model is used to analyze the impact of the efficiency of migration flows on regional income disparities in Canada. A new method to measure such efficiency is presented in an attempt to show that occupations involving high-level skills and training have efficient migration patterns. The relationship between income differentials and internal migration is discussed.     

DOES MIGRATION REDUCE REGIONAL DISPARITIES? THE ROLE OF SKILL‐SELECTIVE FLOWS

The existence of income per capita disparities is a striking feature of European regional development, while increasing internal migration is often cited as a convergence factor. This paper states that this argument is too simple if migration concerns skilled workers. To support this statement, the focus is on skill-selective migration flows: first, it is shown how easily they can happen (for instance, they can be caused by different regional wage settings); then, a model is used to investigate the effects of different regional endowments of immobile factors on migration. The model shows that skill-selective migration can, in some cases, lead to increasing income per capita disparities and, for this reason, policy makers need to pay attention when attempting to narrow regional disparities by easing interregional migration.     

全面收益观发展动态及其在我国会计准则体系中的应用

本文认为,全面收益概念的出现标志着人们已从更广阔的意义上关注收益信息的披露。适应全面收益观对财务业绩报告进行改革是国际趋势,我国新发布的新企业会计准则体系也反映出了全面收益观的应用,引入了利得和损失概念,增加了所有者权益变动表,并对利润表的结构和内容进行了改革。     

Choice of Accounting Method for Valuation of Investment Securities: Evidence from Hong Kong Firms

This study examines whether Hong Kong managers choose “benchmark” or “alternative” valuation method for investment securities, after the Hong Kong SSAP 24 became effective starting with fiscal‐year ending December 31, 1999. Tests are conducted on a sample of 292 firms, out of which 155 Hong Kong firms reported unrealized gains and losses and 128 firms that did not report holding gains/losses, but reported investment securities. The findings indicate that firms with strong relative performance, i.e. current year's EPS higher than that of the last year, chose the alternative valuation method when the investment securities had holding gains and recognized the unrealized holding gains in the equity section of the balance sheet. This finding is consistent with the Cookie Jar hypothesis because these holding gains would be used in the income statement in future periods, when needed. With regard to firms with strong relative performance and holding losses, the findings indicate that the benchmark valuation was used. The losses were reported in the income statement to the extent that they did not reduce the EPS below that of the last year. This finding is consistent with the Income Smoothing Hypothesis, because the use of benchmark valuation reduced EPS of the current year to bring it in line with that of the last year. Evidence on firms with weak economic performance and holding gains or losses provided weak support to the Income Smoothing Hypothesis and Big Bath Hypothesis. Additionally, the results indicate that the firms with high debt‐equity ratio preferred the benchmark method and recorded securities at cost. This treatment provided managers with an opportunity to liquidate or reclassify the securities in future periods and use the accrued gains, when needed. The findings are inconclusive with regard to the impact of bonus plan on the choice of valuation method.     

A tax-based motive for the underpricing of initial public offerings

This paper presents a model of entrepreneurial wealth maximization for the pricing of initial public offerings (IPOs). It is an extension of one previously presented in the literature. The model shows that personal tax rates on ordinary income and capital gains may, in part, determine IPO pricing: an increase in the capital gains tax rate should lower the degree of underpricing. An empirical analysis of the effect of the Tax Reform Act of 1986, which raised the capital gains tax rate, shows that the average degree of underpricing did decrease as predicted, and that this occurs after controlling for other possible influences.     

行为价值计量与收益分配问题探讨

度量价值从某种意义上来说即度量需求方所得，行为价值则需从社会获益估算值中扣除转移价值。个人收益分配应以行为价值——即获取某效用的难度、行为或岗位的责任风险等为基础，制定合理的标准并依据总体和个人实际绩效表现对预算收入进行升降调整。封行为值的分析与监控反映出社会经济管理的水平和价值。     

Regional growth and interstate migration

The current study examines a simultaneous equation model of interstate migration using income growth, employment growth, unemployment growth, population growth, gross migration, and employment in manufacturing as endogenous variables. The results show that neither the growth of employment nor the growth of income in the destination location has been directly important determinants of migration flow. However, an indirect effect through the population variable can be discerned for these variables, and this has important policy implications. A key feature of this migration model is that it incorporates most of the determinant factors as rates of change over time. The study sheds light on the joint and indirect effects of migration and other endogenous variables and draws some important policy implications pertaining to growth.     

Sooner or Later? – Paradoxical Investment Effects of Capital Gains Taxation under Simultaneous Investment and Abandonment Flexibility

This paper analyzes the impact of capital gains taxation on investment timing decisions for risky investment projects with entry and exit flexibility under differential tax rates for ordinary income and capital gains. We investigate whether capital gains taxation influences immediate and delayed investments asymmetrically, given the optimal abandonment decision. If capital gains taxation induces a lock-in effect, this effect is anticipated in the investment timing decision. In contrast to prior research, our numerical simulations show that this lock-in effect of capital gains taxation can induce normal as well as paradoxical effects on investment timing under simultaneous entry and exit flexibility. A paradoxical timing effect, i.e., investment accelerated by capital gains taxation, especially emerges for high liquidation proceeds or, more conservative tax accounting, low interest rates, and low volatilities. In these cases, capital gains taxation reduces the value of the option to invest and hereby increases the propensity to invest immediately. As a second paradoxical tax effect, capital gains taxation may favor delayed real investment over financial investment. Facing these results, tax legislators should not use capital gains taxation as a short-term tax policy instrument to influence investors' timing decisions.     

A Micro‐Decomposition Analysis of Aggregate Human Development Outcomes*

We show how differences in aggregate human development outcomes over time and space can be additively decomposed into a pure mean income (growth) component, a component attributed to differences in the distribution of income, and components attributed to ‘non‐income’ factors and differences in the model linking outcomes to income and non‐income characteristics. The income effect at the micro level is modelled non‐parametrically, so as to flexibly reflect potentially complex distributional changes. Our proposed method is illustrated using data for Morocco and Vietnam, and the results offer some surprising insights into the observed aggregate gains in schooling attainments.     

Immigrants’ Wage Growth and Selective Out‐Migration

This paper examines immigrant wage growth taking selective out‐migration into account using administrative data from the Netherlands. Addressing a limitation in the previous literature, we address the potential endogeneity of immigrants’ labour supply and out‐migration decisions on their earning profiles using a correlated competing risk model. We distinguish between labour and family migrants, given their different labour market and out‐migration behaviours. Our findings show that accounting for selective labour supply is as important as accounting for selective out‐migration. Controlling only for out‐migration selectivity would underestimate immigrants’ wage growth, whilst controlling only for labour market selectivity would overestimate their wage growth. This shows that different selections are important for different types of migrants.     

损益要素的国际比较、协调及对我国的启示

各国财务会计概念框架中的损益要素存在重要差异,表现在损益要素的构成和要素的内涵、外延方面。通过国际比较,指出收益的两种观点、收入(费用)与利得(损失)是否分列、是否单独设置业绩要素等实质性分歧。在损益要素国际协调的背景下,对我国损益要素的重构提出建议。     

Occupational change,employer change,internal migration,and earnings

"In this paper I use microdata from the [U.S.] Panel Study of Income Dynamics to measure the financial returns to intercounty and interstate migration for individuals in a temporal framework accounting for gains that accrue over time....To account for the indirect effects of migration on earnings, explanatory variables are created by interacting migration status with: (1) occupational change, (2) employer change and (3) changes in both occupation and employer. These interaction terms are then included in the earnings functions. Earnings are estimated for three years subsequent to the migration decision to account for the financial returns to migration accruing over time. Results indicate that, when estimating earnings, the use of a simple migration dummy variable will mask the indirect effects of migration on earnings."     

Migration and the Tiebout-Tullock Hypothesis Revisited

This study investigates, using state-level data for the period 2000–2005, the Tiebout hypothesis (as extended by Tullock) of "voting with one's feet." This analysis differs from previous related studies not only in its adoption of more current migration and other data but also in other ways. First, unlike most earlier related studies, it includes a separate measure of the overall cost of living; second, it examines per pupil (rather than per capita) outlays on public primary and secondary education; and third, in addition to property taxes, it also focuses on per capita state income tax burdens. Inclusion of the last of these variables in the analysis is based on studies that have found the existence of a state income tax to have influenced migration patterns and other studies that have found higher state income tax levels to have resulted in reduced per capita income growth over time. Moreover, including both property tax burdens and income tax burdens broadens the scope of the hypothesis. Strong empirical support for the Tiebout-Tullock hypothesis (as interpreted here) is obtained for the study period.     

Economic Development and Income Distribution: A Cross-National Analysis

Abstract . The relationship between level of economic development and income distribution is analyzed using both a relative measure of income distribution and, for the first time, an absolute measure of income distribution which corrects for purchasing power differences between nations. Cross sectional regression analysis findings indicate support for non-linear relationships both in the total sample of 68 nations, and also in sub-samples of 54 developing nations and 14 industrial democracies. Our findings suggest that the poorest 40 percent of the population lose income both relatively and absolutely in the early stages of economic development. Thereafter there are gains in income although with diminishing marginal returns at the highest levels of development.     

Boom, bust, and the poor: Poverty dynamics in the Middle East and North Africa, 1970–1999

This paper analyzes changes in poverty and inequality in the Middle East and North Africa. It finds that the structural relationship between poverty reduction, income growth and distribution is the same for MENA and other developing economies. Prior to 1985 rapid growth sharply reduced poverty. After 1985, despite very low income growth, a rising share of income accruing to the lowest quintile meant that the average income of the poor rose more rapidly than that of the non-poor. These unusual poverty dynamics were primarily due to international migration. Remittances both increased per capita incomes in labor exporting countries and increased the share of income accruing to the poor.