Withholding Tax Rates on Dividends: Symmetries vs. Asymmetries in Double Tax Treaties

Out of all double tax treaties (DTTs) in force in 2012, around 41% are symmetric and 59% are asymmetric, i.e., they prescribe different dividend withholding tax rates (WTRs) depending on the foreign investor’s ownership fraction. The paper investigates the reasons for this phenomenon, namely why some countries in their DTTs prefer homogenous withholding tax rates over separate rates for participation and portfolio dividends. In a theoretical model, I demonstrate why home countries may have an interest in a high withholding tax rate in the host country, even though they do not receive the revenue from this tax. Further, I find confirming evidence that a reason for having asymmetric withholding tax rates on dividends is an existing spatial dependence on the rates of the countries’ peers that may be a driving factor for setting asymmetric rates. Finally, I confirm that the spread itself (i.e., the difference between the portfolio and participation dividends negotiated in the tax treaty) is also affected by the peer countries.Series: WU International Taxation Research Paper Serie

Myths, Metaphors, and Mass-Mediated Reality: U.S. Press Coverage of Bird Flu and Avian Influenza Pandemic, 1996-2006

This study examined U.S. press coverage of the H5N1 bird-flu virus and the possible influenza pandemic in the period 1996 - 2006. One elite and three regional newspapers were used. Framing analysis facilitated by the QDA Miner revealed that militaristic, race, natural disaster and Christian/biblical metaphors, as well as the myths of the “other world,” the “hero,” the “victim,” and the “plague,” created fear that helped to perpetuate the story and keep it on the media agenda. This was a story that the press constructed both scientifically and metaphorically, relying on scientific facts as well as on cultural myths and moral reasons. The social representation of bird flu and a possible influenza pandemic in U.S. press coverage resonated with representations of SARS, Ebola and other infectious diseases. The bird-flu and pandemic story was ripe with values of faith in science and scientific progress, belief and pride in good and generous people and nations, hard and persistent work in the name of public health. This was a compelling human interest story, descriptive of apocalyptic pictures, different worlds and different cultures, mysterious developments, fears of the novel, uncertain and unpredictable. Myths and metaphors, as parts of language, shared culture and understanding, helped the newspapers paint a vivid, descriptive, and informative picture of the bird-flu virus and the expectant avian influenza pandemic. There was consistency between the four newspapers. The myths and metaphors they used in their bird-flu and pandemic reports transcended the particularities of the papers. Myths and metaphors in coverage provoked and kept public interest in the topic, aided comprehension, and served as shorthand for complexity

Price and Quantity Effects of the German Real Estate Transfer Tax

This paper analyzes the tax effects of the German real estate transfer tax (RETT). While the vast majority of single-family houses in Germany are owner-occupied, apartments are usually held by private and incorporated investors. For this reason, we conducted a regression analysis to determine the effects of increasing RETT on the number and the prices of transactions separately for these two market segments. Our findings suggest that increasing the RETT by 1% is associated with a decline in transactions by 0.23% for single-family houses, but with no significant effect on the prices of traded houses. Conversely, for apartments, we find no significantly negative effects on the transactions, but the price effect of the RETT tends to be negative. Finally, for vacant lots, we find even larger quantity effects than for singlefamily houses suggesting roughly an elasticity of -1. The results for this specific market segment indicate that the government operates near the top of a Laffer curve.Series: WU International Taxation Research Paper Serie

KSU Percussion Ensemble with Special Guests, Roswell High School Percussion Ensemble

Kennesaw State University School of Music presents Percussion Ensemble with special guests, Roswell High School Percussion Ensemble.https://digitalcommons.kennesaw.edu/musicprograms/1431/thumbnail.jp

The Relevance of Depreciation Allowances as a Fiscal Policy Instrument: A Hybrid Approach to CCCTB?

A major goal of the EU Commission in the area of direct taxation is the introduction of a common consolidated corporate tax base (CCCTB) in Europe. While hardly discussed in the literature, such a system would limit national discretion over tax depreciation. In a sample of up to 47 countries, we find that the probability of a tax reform that improves the depreciation allowances increases, if the macroeconomic situation is weak. This suggests that changes in depreciation allowances are used as a fiscal instrument for stabilization. A common consolidated tax base deprives national governments from implementing investment incentives via accelerated depreciation. This paper discusses the possible implementation of a hybrid system that combines features of formula apportionment and separate accounting. Such a hybrid system may substantially mitigate transfer pricing problems and other tax planning issues, whilst preserving national discretion over depreciation allowances.Series: WU International Taxation Research Paper Serie

On the relevance of double tax treaties

This paper investigates the effects of double tax treaties (DTTs) on foreign direct investment (FDI) after controlling for their relevance in the presence of treaty shopping. DTTs cannot be considered a bilateral issue, but must be viewed as a network, since FDI can flow from home to host country through one or more conduit countries. By accounting for treaty shopping, we calculate the shortest (i.e. the cheapest) tax distance between any two countries allowing the corporate income to be channelled through intermediate jurisdictions. We differentiate between relevant and neutral DTTs - i.e. tax treaties that offer investors a financial advantage - and irrelevant DTTs and use these data to derive two important results. First, only relevant and neutral tax treaties increase bilateral FDI, whereas irrelevant DTTs do not. We can quantify the increase of FDI due to a relvant DTT at around 22%. Second, significant tax reductions due to treaty benefits will lead to an increase in FDI.Series: WU International Taxation Research Paper Serie

Bilateral Tax Competition and Regional Spillovers in Tax Treaty Formation

Tax treaties are often seen as a means to mitigate fierce tax competition. Building on former literature, we challenge this view by arguing that taxes on passive income reduce effective average tax rates; and induce neighbouring countries to react by reducing bilateral tax rates. As opposed to traditional tax competition, where every foreign investor would benefit from lower tax rates, we show that countries also engage in cutting tax rates for investors from a particular country, leaving taxes for everyone else unaffected. We call this bilateral tax competition, and we test these predictions empirically. We focus on the four treaty withholding tax rates on passive income - portfolio dividends, participation dividends, interest, and royalties - and collect these rates for 3,000 tax treaties and amending protocols signed between 1930 and 2012. We find a positive relationship in the negotiated withholding tax rates of a destination country's tax treaty and destination country's competitors' past tax treaties with the same source country. This relationship is strongest for the tax rates on interest and royalties.Series: WU International Taxation Research Paper Serie

On the relevance of double tax treaties

This paper investigates the effects of double tax treaties (DTTs) on foreign direct investment (FDI) after controlling for their relevance in the presence of treaty shopping. DTTs cannot be considered a bilateral issue, but must be viewed as a network. We define tax distance as the cost of channelling corporate income from one country to another and, by considering treaty shopping through intermediate jurisdictions, we calculate the shortest (i.e. the cheapest) distance between any two countries. We show that relevant tax treaties-which reduce the direct tax distance both over domestic law and the entire existing treaty network-will increase FDI by about 18%