Estimating Firm-Level Effective Marginal Tax Rates and the User Cost of Capital in New Zealand
AbstractEffective marginal tax rates (EMTRs) can be very different from the statutory rate and vary across firms, reflecting such factors as the extent and nature of taxable deductions (losses, depreciation), asset and ownership structures, and debt/equity financing. We estimate firm-specific EMTRs and related user cost of capital (UCC) measures allowing for shareholder-level taxation using data for 2000-2010 from the Longitudinal Business Database. Examining distributions of various UCC measures we find substantial firm-level heterogeneity, systematic changes as a result of tax reforms between 2004 and 2011, and systematic differences between foreign-owned and domestically-owned firms. Choices among alternative UCC measures make a difference to interpretations.
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Bibliographic InfoPaper provided by Motu Economic and Public Policy Research in its series Working Papers with number 13_14.
Length: 51 pages
Date of creation: Nov 2013
Date of revision:
User cost of capital; tax reform; EMTR; New Zealand;
Other versions of this item:
- 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," Treasury Working Paper Series 13/29, New Zealand Treasury.
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-22 (All new papers)
- NEP-CWA-2013-11-22 (Central & Western Asia)
- NEP-INO-2013-11-22 (Innovation)
- NEP-PBE-2013-11-22 (Public Economics)
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