Otto H. Jacobs

The Effective Average Tax Burden in the European Union and the USA: A Computer-based Calculation and Comparison with the Model of the European Tax Analyzer

In this paper we present a computer-based model (so-called European Tax Analyzer) for the international computation and comparison of company tax burdens. The methodology follows the forward-looking concepts for the measurement of effective average tax rates (EATR) on the basis of a model-firm. The EATR is computed for investments generating economic rents (i.e. pure profits above the market interest rate). In contrast to the prevailing approaches for calculating EATR based on separate and isolate investment projects the model-firm approach allows to calculate EATR for more complex and realistic conditions that are relevant for the decision making. Due to its flexibility another important advantage of the model-firm approach is the possibility to include the most relevant and complex provisions of the tax codes (i.e. tax systems, taxes, tax rates, and tax bases). A concrete computation and comparison of the EATR of corporations and their shareholders in five different countries reveals the wide spread between the national EATR. Moreover, for the time series 1995-2000 it could be shown that the differences between the EATR have declined a little. In spite of this convergence, however, tax distortions of competition did not become significantly less.

Die Einstufung des Fehlerrisikos im handelsrechtlichen Jahresabschluß anhand von Regressionen aus empirisch bedeutsamen Erfolgsfaktoren

SummaryIn order to assess accounting and financial statement according to the audit risk approach type and extent of performed audit procedures have to be reduced depending on the risk that accounting and financial statement are misstated. To determine the risk of material misstatement in a highly impartial manner this paper presents an approach that allows calculating the risk of misstatement using regression equations on significant risk items. This approach is based on identifying descriptive risk features and establishing regression equations out of data from 48 enterprises and three years. While descriptive risk features are extracted from the competition model and the findings of success factor research, the transformation of the misstatement risk into operational figures was performed by assessing documented recognitions. The regression analysis showed that the risk of misstatement can be assessed truly with the identified risk items to a high probability. Furthermore the components of the regression function give hints on particular structures and strategies which are of major importance for the risk of misstatement and the determination of main audit areas.

Einflußfaktoren der internationalen Steuerbelastung

In der wirtschaftswissenschaftlichen Literatur wie auch in der politischen Diskussion wird seit einiger Zeit heftig uber die Steuerbelastung deutscher Unternehmen im internationalen Vergleich debattiert. Grund dafur bilden die zunehmende Internationalisierung der Markte und die damit verbundenen Standortfragen. Als ein wichtiger Faktor fur die Frage des Unternehmensstandorts wird die Hohe der Besteuerung im Vergleich zu anderen Industriestaaten gesehen.1

Bericht über die Diskussion

Die Forderung des Referenten nach einem strukturell vollig neuen Steuersystem fur die Bundesrepublik Deutschland regte die Teilnehmer zu einer lebhaften Diskussion an. Dabei ging man von der Aussage des Referenten aus, das jetzige System sei von den Grundsatzen her unzureichend und bringe eine “Flickschusterei” mit sich.

Changes of the effective average tax burden since 1995

This section summarises the main tax reforms and their consequences for the EATR both for the corporations level and that of the shareholders. The aspects of the tax systems referred to and entered in the calculations of the EATR are those that apply to the manufacturing sector and that are generally available. This excludes, as it does for all sectors considered in this report, above all, special investment incentive schemes.

Impact of hypothetical tax reforms in the EU

This section considers the impact of hypothetical tax reforms on the effective tax burdens which were calculated and analysed in the previous sections. Since there is no initiative in this respect, the scenarios for tax reforms should not be regarded as proposals for reforming or harmonising company taxation in Europe. The results from these scenarios should rather help to identify and analyse the impact of different elements of the tax regimes on the effective tax burden. It is important both for policy makers and investors to have an idea about the weight of the different tax drivers in the effective average tax burden (EATR), i.e. to identify the relative weight of the tax bases, the tax rates, the different types of taxes and the corporation tax system in the EATR separately. Therefore, the scenarios for tax reforms are divided into three categories: elements of the corporation tax base, the corporation tax rate including local taxes and the corporation tax system.

Comparison of the European Tax Analyzer results with those obtained by the Devereux-Griffith model

The most meaningful indicators for the measurement of effective levels of company tax burdens are forward-looking concepts. Depending on the type of investment and its return respectively, we can distinguish between the effective marginal and the effective average tax rate. The standard model for the calculation of the effective marginal tax rate (EMTR) is the well known approach of King and Fullerton (1984). This approach has been applied in the most important international studies on the effective tax burden of companies in the past decade.60 By contrast, no standard model exists for the calculation of the effective average tax rate (EATR).

Comparison of the effective tax burden over a ten year period for a base case scenario assuming the tax regimes for the fiscal year 1999

The effective average tax rates (EATR) for the base case scenario, in which only the taxes at the level of the corporation are taken into account, are shown in Table 4.

Effects of the German tax reform 2001

The analysis so far has been based on the tax regimes which were effective in 1999. Although there have been several changes in the tax regimes since that time, we have not incorporated any of them. However, we have taken account of the German tax reform because it seems to be an important and — with respect to the tax changes — substantial reform. Most of the tax changes will become effective as of January 1, 2001.

Die Belastung von Unternehmen mit Steuern und Sozialabgaben in Europa und den USA Eine quantitative Analyse der relevanten Einflußfaktoren

Bei Betrachtung der Mitgliedstaaten der Europaischen Union (EU) zeigt sich, das die Besteuerung von Unternehmen sehr heterogen ausgestaltet ist.1 Erweitert man den Betrachtungshorizont uber die EU-Ebene hinaus, dann nimmt die Zahl der Unterschiede und Facetten bei der Unternehmensbesteuerung zu. Dieser Facettenreichtum ist auch ein Ergebnis der Tatsache, das die einzelnen Nationen den Wettbewerbsfaktor Unternehmensbesteuerung erkannt haben,2 wodurch es international bereits zu einem wachsenden Wettlauf der fisci um Investitionen gekommen ist.3 Infolge dieses Wettbewerbs ist innerhalb Europas seit Mitte der achtziger Jahre ein Trend zur Absenkung der Steuertarife und Verbreiterung der Bemessungsgrundlagen festzustellen. Dennoch fuhren weiterhin deutliche Unterschiede bei der Besteuerung von Unternehmen und Anteilseignern in den EU-Mitgliedstaaten zu unterschiedlichen Standortbedingungen fur Investitionen und beeinflussen damit unternehmerische Investitionsentscheidungen nachhaltig.4 Nach der Zielsetzung eines gemeinsamen europaischen Binnenmarktes sind steuerlich motivierte Standortunterschiede aber unerwunscht. Gelingt es nicht, diese Differenzen durch Steuerwettbewerb abzubauen, so mus dies durch eine gemeinsame Steuerpolitik der Mitgliedstaaten erfolgen.