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Kenan Institute 2022 Annual Theme: Stakeholder Capitalism
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Market-Based Solutions to Vital Economic Issues

tax

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Soda taxes are an increasingly popular policy tool, used to discourage purchases of sugar-sweetened beverages. This study analyzes how marketing conduct and its effectiveness might change after soda tax introductions. Prior studies on the effect of soda taxes focus on price increases but neglect other, managerially relevant marketing conduct tools, such as promotional frequency, promotional discount depth, and feature promotion frequency. This study documents how the marketing conduct and its effectiveness changed with the introduction of the tax across more than 200 retail stores in five markets.

This paper studies how corporate tax cuts in developed countries affect economies in the developing world. We focus on one of the most prominent fiscal policies – the corporate income tax regime – and study a major U.K. tax cut as an exogenous shock to foreign investment in Africa.

Using United States tax return data containing the universe of individual taxable stock sales from 2008 to 2009, we examine which individuals increased their sale of stocks following episodes of market tumult. We find that the increase was disproportionately concentrated among investors in the top 1% and top 0.1% of the overall income distribution, retired individuals and individuals at the very top of the dividend income distribution. Our estimates suggest that, following the day when Lehman Brothers collapsed, taxpayers in the top 0.1% sold $1.7 billion more in stocks than individuals in the bottom 75%. This difference is equal to 89% of average daily sales by taxpayers in the top 0.1%.

The Biden administration is proposing significant increases in corporate taxes to finance investments in infrastructure and other priorities. Proposed reforms include a global minimum tax on book income and other changes intended to limit the ability of US multinational companies to reduce US tax by shifting investments and reported profits to low-tax foreign countries. In order to promote a competitive global landscape, the administration is concurrently working with the OECD to recommend its members adopt similar changes.

Join us on Tuesday, May 11, 2021, from 1-2:40 p.m EST for Federal Tax Policy: International Outlook. This webinar, which provides 2.0 CPE credits, is the third in a series of tax policy webcasts jointly hosted by the Kenan Institute-affiliated UNC Tax Center and the AICPA.

Mar 30, 2021

Tax Boycotts

To what extent do consumers boycott in response to corporate tax activities? Anecdotes suggest potential consumer backlash is a meaningful deterrent to corporate tax planning, and the tax literature has developed expectations that these boycotts happen. But empirical evidence on their existence and impact is limited. We undertake a comprehensive study to examine how consumers’ purchase behavior relates to corporate tax activities, triangulating across several designs, samples, and measures.

We evaluate the impacts of tax policy on asset returns using the U.S. municipal bond market. In theory, tax-induced ownership segmentation limits risk sharing, creating downward-sloping regions of the aggregate demand curve for the asset. In the data, cross-state variation in tax privilege policies predicts differences in in-state ownership of local municipal bonds; the policies create incentives for concentrated local ownership.

Tax audits are a necessary component of the tax system but have potentially adverse real effects on firms selected for audit. This paper examines the real effects on small firms of being subjected to a tax audit, using administrative data from both random and nonrandom tax audits. We find that audited firms are less likely to continue as going concerns following the audit. However, we find that the effect is almost entirely isolated to firms that underreported their tax liability.

Governments often subsidize startups with the goal of spurring entrepreneurship using tax incentives. Exploiting the staggered implementation of angel investor tax credits in 31 U.S. states from 1988 to 2018, we find that these programs increase the number of angel investments and average investment size.

This study examines the relation between audit personnel salaries and office-level audit quality. We measure audit personnel salaries at the associate, senior, and manager ranks for Big 4 audit offices from 2004 to 2013, using unique individual-auditor-level data obtained from the U.S. Department of Labor.

We measure a bank’s connectedness by constructing a measure of its text similarity with other banks based on 10-K business description and MD&A discussions. We find that tail-risk comovement between a given bank and the banking system is increasing in the bank’s average similarity.

Feb 9, 2017

IRS Attention

We study how public and private disclosure requirements interact to influence both tax regulator enforcement and firm disclosure. We find that, following Schedule UTP, firms significantly increased the quantity and altered the content of their tax‐related disclosures, consistent with lower tax‐related proprietary costs of disclosure. Our results suggest that changes in SEC disclosure requirements altered the IRS's behavior with regard to public information acquisition, and, relatedly, changes in IRS private disclosure requirements appear to change firms’ public disclosure behavior.