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Measuring Effective Tax Rates in the Presence of Multiple Inputs: A Production Based Approach

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Author Info

  • Kenneth McKenzie

    ()

  • Jack Mintz

    ()

  • Kimberly Scharf

Abstract

We suggest a new method for comparing tax regimes acrossjurisdictions. The approach aggregates taxes on inputs by focussingon production, rather than investment, decisions. Taxes on variousinputs affect production decisions by increasing marginal costs.By calculating the difference between the tax-inclusive and tax-exclusivemarginal cost of production, we determine the effective excisetax rate on marginal costs implied by all of the various taxesimposed upon the firm‘s inputs. The effective tax rate on marginalcosts provides a convenient summary measure of the potentialimpact of taxes on all inputs on production location decisions. Copyright Kluwer Academic Publishers 1997

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File URL: http://hdl.handle.net/10.1023/A:1008620522432
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Bibliographic Info

Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 4 (1997)
Issue (Month): 3 (July)
Pages: 337-359

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Handle: RePEc:kap:itaxpf:v:4:y:1997:i:3:p:337-359

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Web page: http://www.springerlink.com/link.asp?id=102915

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References

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  1. Auerbach, Alan J, 1979. "Wealth Maximization and the Cost of Capital," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 433-46, August.
  2. John B. Shoven & John Whalley, 1992. "Canada-U.S. Tax Comparisons," NBER Books, National Bureau of Economic Research, Inc, number shov92-1, May.
  3. R. W. Boadway & N. Bruce & J. Mintz, 1982. "Corporate Taxation and the Cost of Holding Inventories," Canadian Journal of Economics, Canadian Economics Association, vol. 15(2), pages 278-93, May.
  4. Wilton, D & Prescott, D., 1993. "The Effects of Tax Increases on Wage and Labour Costs," Papers 93-29, Queen's at Kingston - School of Policy Studies.
  5. Kenneth McKenzie & Jack Mintz, 1992. "Tax Effects on the Cost of Capital," NBER Chapters, in: Canada-U.S. Tax Comparisons, pages 189-216 National Bureau of Economic Research, Inc.
  6. Chun-Yan Kuo & Thomas Mcgirr & Satya Poddar, 1988. "Measuring the Non-Neutralities of Sales and Excise Taxes in Canada," Development Discussion Papers 1988-08, JDI Executive Programs.
  7. Kenneth J. McKenzie, 1994. "The Implications of Risk and Irreversibility for the Measurement of Marginal Effective Tax Rates on Capital," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 604-19, August.
  8. Robin Boadway & Neil Bruce & Jack Mintz, 1984. "Taxation, Inflation, and the Effective Marginal Tax Rate on Capital in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 17(1), pages 62-79, February.
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Citations

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Cited by:
  1. Richard Fabling & Norman Gemmell & Richard Kneller & Lynda Sanderson, 2013. "Estimating Firm-Level Effective Marginal Tax Rates and the User Cost of Capital in New Zealand," Working Papers 13_14, Motu Economic and Public Policy Research.
  2. Jack M. Mintz & Stephen R. Richardson, 2001. "Taxation of Financial Intermediation Activities in Hong Kong," Working Papers 092001, Hong Kong Institute for Monetary Research.
  3. Fabling, Richard & Gemmell, Norman & Kneller, Richard & Sanderson, Lynda, 2013. "Estimating Firm-Level Effective Tax Rates and the User Cost of Capital in New Zealand," Working Paper Series 2854, Victoria University of Wellington, Chair in Public Finance.
  4. Alowin Moes, 1999. "Effective Tax Rates on Capital in New Zealand - Changes 1972-1998," Treasury Working Paper Series 99/12, New Zealand Treasury.
  5. Gérard, Marcel, 1999. "L’imposition des revenus de l’investissement en Europe, une hétérogénéité coûteuse," L'Actualité Economique, Société Canadienne de Science Economique, vol. 75(1), pages 401-426, mars-juin.
  6. Michael Devereux, 2003. "Measuring taxes on income from capital," IFS Working Papers W03/04, Institute for Fiscal Studies.
  7. Duanjie Chen & Jack Mintz, 2005. "Assessing Ontario's Fiscal Competitiveness," Canadian Public Policy, University of Toronto Press, vol. 31(1), pages 1-28, March.
  8. Desai, Mihir A. & Foley, C. Fritz & Hines, James Jr., 2004. "Foreign direct investment in a world of multiple taxes," Journal of Public Economics, Elsevier, vol. 88(12), pages 2727-2744, December.
  9. Garret Kent Fellows, 2014. "The Yield Curve as a Determinant of Investment in Durable Capital," Working Papers 2014-38, Department of Economics, University of Calgary, revised 10 Feb 2014.
  10. Jack Mintz, 2008. "Reply/Réponse ­ Fiscal Competitiveness and Total Competitiveness: A Note," Canadian Public Policy, University of Toronto Press, vol. 34(4), pages 519-520, December.

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