Tax effects on investments

This doctoral thesis investigates empirically and theoretically the effect of tax on the composition of the optimal allocation of wealth to risky assets from various points of view. The first empirical chapter considers the effect of tax on a U.K. personal investor targeting domestic financial products. This research helps investors estimate the impact of a future tax change and maximize their portfolio return using a newly proposed optimization model and solution method. Following Bonami and Lejeune (2009), personal portfolios are constrained to meet or exceed a prescribed return threshold with a high confidence level and satisfy buy-in threshold and diversification constraints. Their model is improved by incorporating complex tax trading rules with withdrawal features that enhance those considered by Osorio et al. (2004, 2008). A solution based on Greedy methods is developed to deal with the proposed large-scale portfolio optimization problem. The empirical results report substantial non-linear tax effects on riskier assets and enhanced effects of withdrawal tax only when tax rates are high. The developed framework better enables investors to react to tax changes, and tax policy makers to quantify the influence of tax changes on private investment preferences. The second empirical chapter investigates the effect of an international transaction tax, the so-called ‘Tobin tax’, from the point of view of U.K., U.S., and E.U. personal investors targeting international financial products. This empirical research helps the policy maker to estimate the impact of Tobin tax on international capital flows and, therefore, assess the optimal way to introduce the new tax. An optimization model is proposed to maximize the expected net Sharpe ratio and find the optimal risky portfolio internationally. Complex trading and tax rules are considered. To examine the precise effects of different investment and transaction tax rules, a comparison of four tax settings is presented: source only, residence only, mixed with credit and mixed with double taxation. The experimental results show that a source only tax union has more capital transits in international markets than a residence only tax union, and its optimal market portfolio is more sensitive to regional tax policy. In a mixed tax system, double taxation between residence- and source-taxed markets significantly reduces the attraction of the latter while its attraction is maintained with the credit method. Tobin tax can reduce the volatility of the market but the effect varies with tax rate, certain market specifications (e.g., expected returns and correlations with overseas markets) and investment tax rules. It does not depend on which side of the capital flow (inflow or outflow) is subject to Tobin tax. Finally, an agreement among countries to produce a consistent Tobin tax rate globally can significantly reduce the negative effect of Tobin tax on capital flows while retaining its positive effect on market stability in comparison to heterogeneous Tobin tax rates. Finally, the third analytical chapter investigates theoretically the effect of tax from the point of view of an arbitrageur. This theoretical research addresses the condition of the existence of arbitrage opportunities on an after-tax basis, helping the policy maker improve the fairness and efficiency of markets by addressing effective tax policy. To track tax arbitrage, continuous time optimization models are developed with heterogeneous taxation between investors programmed with continuous rather than static income and capital gains (or losses). It is proved analytically that arbitrage opportunities exist for both perfectly correlated and non-perfectly correlated assets. For perfectly correlated assets, the analysis shows that tax arbitrage may exist, with the investor’s top tax rate and some static asset parameters determining the existence of arbitrage opportunities. It is also proved that many of the equilibria obtained under income tax only are not optimal if investors are also subject to capital gains tax. For non-perfectly correlated assets, however, it is the market prices of cap and floor options on asset returns that decide the existence of tax arbitrage. In the government fixed income bond market, tax arbitrage between investors is difficult to eliminate unless investors are all subject to the same tax rates. But the return from this arbitrage can be limited if the government applies the same top tax rate to all investors

Feasibility study on the application of carbon dioxide phase change fracturing technology in a foundation pit of an open cut tunnel

Carbon dioxide phase change fracturing technology is a brand-new and efficient cracking and tunneling technology. Because the method utilizes the change of carbon dioxide state, it belongs to a pure physical process. By adjusting the release rate of gaseous substances, it can effectively control the pressure of the gas, and achieve micro vibration, zero flying stone, zero toxic gas emission, and no micro harmful effect of shock wave, but the application of carbon dioxide phase change cracking technology in urban foundation pit excavation is less. In this paper, through the analysis of three different cracking parameters of urban foundation pit excavation process, it is found that when the diameter of the cracked pipe is 85 mm, the construction safety can be guaranteed. In addition, according to the on-site cracking effect, the carbon dioxide phase change cracking technology is a safe, reliable, relatively economical and efficient excavation technology under urban complex environmental conditions, and will not affect the surrounding environment during use, but Its cracking efficiency has a great relationship with the air surface

CONVERSION OF WOODY BIOMASS TO ENERGY, CHEMICALS AND MATERIALS

Conversion of renewable biomass to chemicals and energy is imperative to sustain our way of life as known to today. Fossil fuels have become the predominant energy source today. However, fossil deposits are limited and not renewable. Biomass is a reliable source of chemicals and energy that can be replenished at the rate of our needs. The biorefinery is a concept for the collection of processes used to convert biomass to chemicals and energy. The Biorefinery is a “catch and release” way of using carbon that is beneficial to the environment and the economy. Discussions are made for the elements of the wood-based biorefinery as proposed at SUNY ESF (College of Environmental Science and Forestry): hot-water extraction, hydrolysis, membrane separation / concentration, pulping, and biological conversion of sugars to biofuels, chemical, and biopolymers, conversion of residual woody biomass to reconstituted wood products. Hemicelluloses are the most easily separable main component of woody biomass and thus form the bulk of the extracts obtained in hot-water extraction of wood. Hydrolysis of hemicelluloses produces 5-carbon sugars (mainly xylose), 6-carbon sugars (mainly glucose and mannose), and acetic acid. Fermentation of wood extract hydrolysate can produce biofuel: ethanol and butanol. Brief discussions will also be presented on the utilization of the residual woodchips: pulp and paper, reconstituted wood products, wood pellets, and burning / gasification for energy. Hemicellulose contributes to the weight but not much to the strength of the material and thus hemicellulose-extracted woody biomass might produce lighter stronger particle board products

Nonlinear dynamic characteristic of gear system with the eccentricity

In this paper, the dynamic behavior of a spur gear system was studied with external and internal dynamic incentive. The vibration differential equations for spur gear system were expressed in equivalent discrete models of mass, damping, and spring elements using the Lagrange equation considering the effect of lateral-torsional vibration coupling on the dynamics of gears, which was solved by the Newmark method. The investigation was carried out with multi-degree of freedom system for spur gear model, which took into account gravity, gear eccentricity, backlash, dynamic transmission error and external dynamic incentive. The lateral and torsional response characteristics of geared system were analyzed by changing the value of the rotational speed, backlash and eccentricity. It was shown from the research that the jump discontinuous phenomenon occurred at lower backlash value with increasing rotational speed and the frequency amplitudes also increased, and the regions of continuous frequency became winder when the rotational speed difference was greater. Moreover, complicated combination frequency components followed a rule of increasing firstly and then decreasing with the different backlash and eccentricity. The study may contribute to a further understanding of the dynamic characteristics of such a gear rotor-bearing system