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Chair der Sitzung: Lisa Hillmann, Georg-August-Universität Göttingen
Ort:Virtueller Raum 4
The Irrelevance of Threshold-Dependent Tax Enforcement for the Size Distribution of Firms
Drahomir Klimsa, Robert Ullmann
Universität Augsburg, Deutschland
Diskutant: Lisa Hillmann (Uni Göttingen)
This paper investigates how firms respond to threshold-dependent intensity of tax enforcement. We use genuine firm-level tax return data over the entire population of German firms and exploit industry variation in firm-size thresholds applied by the tax administration. In our setting each threshold marks a considerable spike in audit intensity (in particular likelihood and quality of audit), and hence, should create strong incentives to bunch below the threshold. However, we find no such effect in our large sample analysis, i.e. most firms apparently forgo the benefits of reducing audit intensity. We attribute this empirical observation to the effects of optimization frictions. These particularly include costs of the operational implementation of size management and inattention. Our results are in line with what has been coined the “under-sheltering puzzle” in the tax avoidance
Private Firm and Shareholder Response to Dividend Taxation: Evidence from the Taxation of Minority Shareholders
Georg-August-Universität Göttingen, Deutschland
Diskutant: Raffael Speitmann (WU Wien)
This paper examines the response of private firms and their shareholders to a dividend tax increase, which affects only a small group of shareholders. Using an exogenous shock in Germany, my results suggest that firms do not adjust their payout policy but corporate minority shareholders, the only ones affected by the increase in shareholder taxes, reduce their minority stakes in private firms after the dividend increase. Additional cross-sectional tests indicate a stronger shareholder reaction if the corporate minority shareholder is financially distressed, owns a minority stake in a firm with a high dividend payout or a majority shareholder, and does not belong to the same group of corporations as the firm, in which it owns a minority stake. My findings add to the very limited literature on the effects of dividend taxes on payout decisions of private firms and reactions of shareholders.