Management Incentives Under Formula Apportionment Tax-Induced Distortions of Effort and Compensation in a Principal-Agent Setting

Martini, Jan Thomas; Niemann, Rainer; Simons, Dirk

doi:10.2139/ssrn.2464513

Cited by 2 publications

(1 citation statement)

References 39 publications

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“…For example, in the situation where every EU Member State can apply for its own tax rate, the incorporation of payroll costs in the allocation formula will affect employment between the EU Member States. This was proved by Martini et al (2014), who consider a principal agent model of the LEN-type 2 with agents in two different jurisdiction and the allocation formula with the payroll as the only formula factor. They concluded that the employment is shifted to the low tax jurisdiction and the extension of the shifting activities intensifies with the rising tax rate differential.…”

Section: Doi: 1017221/222/2015-agriceconmentioning

confidence: 97%

Tax sharing under the Common Consolidated Corporate Tax Base: Measurement of the profit generating factors in the agriculture sector

Nerudová¹,

Krchnivá²

2016

Agric. Econ. - Czech

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Th e allocation formula for the distribution of the Common Consolidated Corporate Tax Base (CCCTB) should be based on three macroeconomics factors which are considered to have the largest impact on profi tability. Th e paper researches the ability of the allocation formula factors to explain variability in profi t/loss generation of single enterprises from the perspective of the Czech Republic with the special focus on the explanation power of the allocation formula on profi t/ loss generation of companies operating in the agriculture sector (NACE A). Th e analysis is based on the comparison of the coeffi cients of determination as an indicator of the explained variability of the proposed simple as well as the multiple regression models. Th e paper concludes that proportion of explained profi tability by the formula factors as are defi ned by the Draft Directive on a Common Consolidated Corporate Tax Base can diff er by more than 30% with regard to the sector of economic activity classifi ed by the NACE, whereas in the individual subsectors of the agriculture the diff erence may amount to 40%.

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Section: Doi: 1017221/222/2015-agriceconmentioning

confidence: 97%

Tax sharing under the Common Consolidated Corporate Tax Base: Measurement of the profit generating factors in the agriculture sector

Nerudová¹,

Krchnivá²

2016

Agric. Econ. - Czech

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The impact of taxation on international assignment decisions: a principal–agent approach

Martini

Niemann

2014

Rev Manag Sci

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Impact of Taxation on International Assignment Decisions -A Principal-Agent Approach Terms of use: Documents in AbstractIn many industries like management consulting, IT consulting, or construction highly qualified employees, i.e., experts or executive managers, have to be assigned to temporary projects. In firms with many employees and various different projects, this assignment decision involves a complex optimization procedure. Obviously, the employees' productivities in the respective projects are crucial for the employer's optimal assignment decision, but assignment can also be affected by risk-incentive trade-offs. Moreover, taxation can alter the assignment decision, especially if employees are sent abroad as expatriates so that international tax law has to be taken into account. To address these issues simultaneously, we combine a human resource assignment problem with a principal-agent problem of the LEN type. Both wage taxation at the agents' level and corporate taxation at the principal's level are integrated. We show that national tax rules as well as the methods for avoiding double taxation and the agents' tax characteristics are important determinants for international assignment decisions. The effects of tax rate variations can be ambiguous and depend on whether the exemption method or the credit method are applied, in particular if agents make differing choices of residence. From a tax policy perspective, the exemption method should be preferred because the tax effects are more transparent than under the credit method. Special deductions for incoming expatriates have only little effects on the optimal assignment decision.JEL-Code: H240, H250, M410.

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Management Incentives Under Formula Apportionment Tax-Induced Distortions of Effort and Compensation in a Principal-Agent Setting

Cited by 2 publications

References 39 publications

Tax sharing under the Common Consolidated Corporate Tax Base: Measurement of the profit generating factors in the agriculture sector

Tax sharing under the Common Consolidated Corporate Tax Base: Measurement of the profit generating factors in the agriculture sector

The impact of taxation on international assignment decisions: a principal–agent approach

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