Johannes Becker

Taxing foreign profits with international mergers and acquisitions

A large part of border crossing investment takes the form of international mergers and acquisitions. In this article, we ask how optimal repatriation tax systems look like in a world where investment involves a change of ownership, instead of a reallocation of real capital. We find that the standard results of international taxation do not carry over to the case of international mergers and acquisitions. The deduction system is no longer optimal from a national perspective and the foreign tax credit system fails to ensure global optimality. The tax exemption system is optimal if ownership advantage is a public good within the multinational firm. However, the cross-border cash-flow tax system dominates the exemption system in terms of optimality properties.

Taxation of Foreign Profits with Heterogeneous Multinational Firms

Recent empirical studies find that foreign direct investment (FDI) by a multinational firm is not associated with a reduction of the firm’s domestic activities. As it is often argued, this finding may imply that a country should not tax the firm’s foreign profit income since this reduces foreign investment without benefitting the domestic economy. The paper analyzes this argument using a model with heterogeneous multinational firms which serve a foreign market through exports or FDI. If a firm switches from exporting to FDI, domestic activity and tax payments may decrease, stay constant or even rise due to intra-firm trade. It turns out that, in all three cases, the optimal tax system implies full taxation after deduction of foreign tax payments. If the country accounts for the effects of its policy on the foreign price level, the case for taxing foreign income becomes even stronger. From a global point of view, the nationally optimal tax rate on repatriated foreign profits is inefficiently high. In contrast to the standard literature, the globally optimal tax system requires a lower tax rate than under the tax credit system which, under certain circumstances, may imply exempting foreign income from tax.

Individualized current-shaping reduces DBS-induced dysarthria in patients with essential tremor

Objective: To investigate in patients with essential tremor (ET) treated with thalamic/subthalamic deep brain stimulation (DBS) whether stimulation-induced dysarthria (SID) can be diminished by individualized current-shaping with interleaving stimulation (cs-ILS) while maintaining tremor suppression (TS). Methods: Of 26 patients screened, 10 reported SID and were invited for testing. TS was assessed by the Tremor Rating Scale and kinematic analysis of postural and action tremor. SID was assessed by phonetic and logopedic means. Additionally, patients rated their dysarthria on a visual analog scale. Results: In 6 of the 10 patients with ET, DBS-ON (relative to DBS-OFF) led to SID while tremor was successfully reduced. When comparing individualized cs-ILS with a non–current-shaped interleaving stimulation (ILS) in these patients, there was no difference in TS while 4 of the 6 patients showed subjective improvement of speech during cs-ILS. Phonetic analysis (ILS vs cs-ILS) revealed that during cs-ILS there was a reduction of voicing during the production of voiceless stop consonants and also a trend toward an improvement in oral diadochokinetic rate, reflecting less dysarthria. Logopedic rating showed a trend toward deterioration in the diadochokinesis task when comparing ON with OFF but no difference between ILS and cs-ILS. Conclusion: This is a proof-of-principle evaluation of current-shaping in patients with ET treated with thalamic/subthalamic DBS and experiencing SID. Data suggest a benefit on SID from individual shaping of current spread while TS is preserved. Classification of evidence: This study provides Class IV evidence that in patients with ET treated with DBS with SID, individualized cs-ILS reduces dysarthria while maintaining tremor control.

Strategic Trade Policy through the Tax System

If conventional instruments of strategic trade policy are unavailable, the system of foreign profit taxation and transfer price guidelines may serve as surrogate policy instruments. In this paper, I consider a model where firms from two countries compete with each other on a third market. I analyze optimal policy choices of the firms’ residence countries aiming at strategically manipulating the competitivity of their firms on the third market. I show that, as has recently been claimed, countries prefer the tax exemption system over the tax credit system if transfer prices for headquarter services to the affiliate are close to the headquarter’s variable cost and if the third country’s tax rate is low (i.e., if there is a large tax differential between both locations within the firm). However, if transfer prices are high and the tax rate in the third market country is sufficiently close to the residence country’s tax rate, I show that the tax credit system is an optimal tax policy choice for both countries. From a policy perspective, the view that the tax exemption system is generally the best policy response if domestic firms’ competitiveness is a policy goal has to be qualified.

Politicians’ outside earnings and electoral competition

This paper deals with the impact of electoral competition on politicians´ outside earnings. We propose a simple theoretical model with politicians facing a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The model has a testable implication stating that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this implication using a new dataset on outside earnings of members of the German federal assembly. Taking into account the potential endogeneity of measures of political competition that depend on past election outcomes, we find that politicians facing low competition have substantially higher outside earnings.

Sources of variation in tonal alignment: Evidence from acoustic and kinematic data

Abstract This study is concerned with the alignment of f0 peaks in rising LH pitch accents in German, both in relation to acoustically defined segments, referred to as segmental anchors, as well as to dynamically defined speech gestures, referred to as articulatory anchors. The effects investigated were the effects of syllable structure (test words ˈCV:CV and ˈCVCV, where the test syllable is open or closed, respectively), dialectal background (the varieties of German spoken in Dusseldorf and Vienna), and accent status in the intonational hierarchy (prenuclear and nuclear accents). As reported for related languages, peaks in closed syllables tended to be later than those in open syllables. However, it was only in nuclear accents that those differences were systematic for all four speakers. Thus only limited support can be provided for an alignment with the syllable edge. Although there was a tendency for Southern varieties to have later peaks than Northern ones, as also found in previous studies, alignment latencies of individual speakers in the two dialectal groups overlapped. These results support a gradient view of dialectal variation in tonal alignment. In this view, dialectal differences are not represented symbolically. Rather, the rising accents used by speakers of both varieties can be adequately captured with one symbolic representation. When comparing prenuclear and nuclear accents, by contrast, differences were found which could be interpreted as discrete. Whereas nuclear accent peaks were anchored to the intervocalic consonant, prenuclear accent peaks were anchored to the following unstressed vowel. This anchor shift could clearly be observed both in the acoustic and articulatory records, reflecting a difference at the symbolic level, possibly in terms of an additional tone following the LH complex.

Tax enforcement and tax havens under formula apportionment

In this paper, we consider optimal tax enforcement policy in the presence of profit shifting towards tax havens. We show that, under separate accounting, tax enforcement levels may be too high due to negative fiscal externalities. In contrast, under formula apportionment, tax enforcement is likely to be too low due to positive externalities of tax enforcement. Our results challenge recent contributions arguing that, under formula apportionment, there is a tendency towards inefficiently high levels of (effective) tax rates.

The Effect of Deep Brain Stimulation on the Speech Motor System

PURPOSE Chronic deep brain stimulation of the nucleus ventralis intermedius is an effective treatment for individuals with medication-resistant essential tremor. However, these individuals report that stimulation has a deleterious effect on their speech. The present study investigates one important factor leading to these effects: the coordination of oral and glottal articulation. METHOD Sixteen native-speaking German adults with essential tremor, between 26 and 86 years old, with and without chronic deep brain stimulation of the nucleus ventralis intermedius and 12 healthy, age-matched subjects were recorded performing a fast syllable repetition task (/papapa/, /tatata/, /kakaka/). Syllable duration and voicing-to-syllable ratio as well as parameters related directly to consonant production, voicing during constriction, and frication during constriction were measured. RESULTS Voicing during constriction was greater in subjects with essential tremor than in controls, indicating a perseveration of voicing into the voiceless consonant. Stimulation led to fewer voiceless intervals (voicing-to-syllable ratio), indicating a reduced degree of glottal abduction during the entire syllable cycle. Stimulation also induced incomplete oral closures (frication during constriction), indicating imprecise oral articulation. CONCLUSION The detrimental effect of stimulation on the speech motor system can be quantified using acoustic measures at the subsyllabic level.

Konzernsteuerquote und Investitionsverhalten

ZusammenfassungKapitalmarktorientierte Unternehmen in Deutschland orientieren sich in zunehmendem Maße an der Konzernsteuerquote. Diese unterscheidet sich in wesentlichen Aspekten von den in der Forschung gängigen Maßen der effektiven Besteuerung, die auf dem neoklassischen Investitionsmodell basieren. Dies wirft die Frage auf, ob und wie sich das Investitionsverhalten ändert, wenn die maßgebliche Größe die Konzernsteuerquote ist. Es lässt sich analytisch zeigen, dass wichtige unternehmerische Entscheidungen bei Berücksichtigung der Konzernsteuerquote anders ausfallen als im neoklassischen Investitionsmodell. Wir vergleichen die Entwicklung der Konzernsteuerquote im Zeitablauf mit anderen Maßen der effektiven Besteuerung für mehrere OECD-Länder.SummaryDue to the increasing importance of the stock market for firms throughout the world, the IAS Effective Tax Rate (ETR) becomes a more and more decisive indicator for the evaluation of management performance. Compared with an effective tax rate based on the standard neoclassical model, the ETR is different in some substantial aspects. The question arises whether and how corporate investment behaviour changes, if the ETR is the decisive indicator for the management. In this paper we show that some important firm decisions are altered depending on whether the ETR or the neoclassical model is considered. We provide some empirical hints that the ETR might be crucial for firm behaviour and that governments set tax parameters as if this were the case. However, it remains an open question why the ETR (and not some other indicator) has gained so much importance.

The Effect of Uni- and Bilateral Thalamic Deep Brain Stimulation on Speech in Patients With Essential Tremor: Acoustics and Intelligibility.

Deep brain stimulation (DBS) of the ventral intermediate nucleus (VIM) is performed to suppress medically‐resistant essential tremor (ET). However, stimulation induced dysarthria (SID) is a common side effect, limiting the extent to which tremor can be suppressed. To date, the exact pathogenesis of SID in VIM‐DBS treated ET patients is unknown.