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Business and Economics > Corporate Taxation

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Cover IMF Working Papers
Macroeconomic Effects of Dividend Taxation with Investment Credit Limits
Matteo Ghilardi
and
Roy Zilberman
We analyze the effects of dividend taxation in a general equilibrium business cycle model with an occasionally-binding investment credit limit. Permanent dividend tax reforms distort capital investment decisions in the binding long-run equilibrium, but are neutral otherwise. Temporary unexpected tax cuts stimulate shortterm real activity in the credit-constrained economy, yet produce contractionary macroeconomic outcomes in the slack regime. The occasionally-binding constraint reconciles the `traditional' and `new' views of dividend taxation, and highlights the importance of measuring the firm's initial borrowing position before enacting tax reforms. Finally, permanently lower dividend taxes dampen financial business cycles, and help to explain macroeconomic asymmetries.
Keywords:
Dividend Taxation; Occasionally-Binding Borrowing Constraints; Investment; Business Cycles.; borrowing position; tax relief; dividend distribution; dividend tax rate; dividend tax adjustment; tax environment; benchmark system; dividend tax shock; dividend tax cut; tax adjustment; dividend tax system; Dividend tax; Credit; Corporate income tax; Collateral; Stocks
Cover IMF Staff Country Reports
Switzerland: Selected Issues
International Monetary Fund. European Dept.
This Selected Issues paper analyzes key features of corporate taxation in Switzerland. The Swiss corporate tax system includes many aspects of a territorial regime; is highly attractive for multinational companies; and collects non-negligible revenues, but the status quo is not sustainable. The proposed reform would eliminate differences in the tax treatment of foreign and Swiss sourced income. Further, cantons are expected to lower their corporate income tax (CIT) rates, bringing the combined (municipal, cantonal, and federal) tax rate (averaged across cantons) to about 13.9 percent. Costs of lowering the CIT rates would be unequally distributed across cantons, and would be costlier for cantons with a large immobile CIT base.
Keywords:
ISCR; CR; rate; exchange rate; Exchange market pressure; interest rate; aggregate mortgage lending; CIT rate; mortgage interest rates; interest rate differential; exemption threshold; Corporate income tax; Exchange rates; Personal income; Mortgages; Income and capital gains taxes; Global; Eastern Europe; Europe
Cover IMF Staff Country Reports
Spain: Staff Report for the 2014 Article IV Consultation
International Monetary Fund. European Dept.
This 2014 Article IV Consultation highlights that economic growth in Spain has resumed, and unemployment is falling. Exporters are gaining market share, and the current account is in surplus for the first time in decades. Financial conditions have improved sharply, with sovereign yields at record lows. Business investment is rebounding strongly and private consumption has also started to recover owing to improved employment prospects and rising confidence. Executive Directors have welcomed the improving Spanish economy. They have stressed that labor market reform should be accompanied by product and service market liberalization to maximize the gains to growth and jobs.
Keywords:
ISCR; CR; government tax Reform Proposa; government Tax Reform Proposal; rate; government; vis nonresident; increase VAT; trend productivity growth; committee's recommendation; Employment; Unemployment; Labor markets; Wages; Corporate income tax; Europe; Global
Cover IMF Staff Country Reports
France: Selected Issues
International Monetary Fund
This Selected Issues paper first explains the recent increase in trend growth and then discusses how labor market and tax policies could best sustain it. This study calculates French trend growth estimating simultaneously a Cobb–Douglas production technology and total factor productivity. The main conclusion is that French trend growth indeed increased during the second half of the 1990s to an average annual rate of 2.1 percent, from 1.8 percent in 1993. This was not owing to a recovery of total factor productivity growth.
Keywords:
ISCR; CR; ALMPs Affect Employment; income; labour market; total factor productivity growth; labor market; proportional tax; tax burden; capital service; ALMP exp; Total factor productivity; Personal income tax; Social security contributions; Corporate income tax; Labor taxes; Europe; Global
Cover IMF Working Papers
Does Inflation Targeting Matter?
Niamh Sheridan
and
Laurence M. Ball
This paper asks whether inflation targeting improves economic performance, as measured by the behavior of inflation, output, and interest rates. We compare 7 OECD countries that adopted inflation targeting in the early 1990s to 13 that did not. After the early 1990s, performance improved along many dimensions for both targeting and nontargeting countries. In some cases, the targeters improved by more. However, these differences are explained by the fact that targeters performed worse than nontargeters before the early 1990s, and there is regression towards the mean. Once one controls for this, there is no evidence that inflation targeting improves performance.
Keywords:
WP; inflation targeting country; inflation-targeting dummy; unit inflation shock; inflation expectation; inflation targeters; OECD inflation forecast; Inflation Targeting Regime; inflation-targeting period; trend inflation; inflation persistence; Inflation; Inflation targeting; Corporate income tax; Production growth; Short term interest rates
Cover Sweden's Welfare State
Sweden's Welfare State
Can the Bumblebee Keep Flying?
Mr. Subhash Madhav Thakur
,
Ms. Valerie Cerra
,
Mr. Balázs Horváth
, and
Mr. Michael Keen

Abstract

Sweden has long been viewed as epitomizing a particular approach to economic and social policy. To its advocates, the Swedish welfare state builds on a strong social consensus favoring extensive state intervention to ensure a high quality of life for all Swedes. To its critics, the Swedish system is marked by excessive government intervention and attendant inefficiencies. These contrasting views are captured in imagery used by Prime Minister Göran Persson: "Think of a bumblebee. With its overly heavy body and little wings, supposedly it should not be able to fly--but it does." The Swedish welfare state is the bumblebee that has managed to fly. This book draws on many years of IMF surveillance and policy advice to explain how it has done so, to assess the challenges that the Swedish model faces in the new century, to propose a strategy for dealing with those challenges, and to draw lessons for the many other countries that face similar challenges from globalization and demographics.

Keywords:
BOOK; wage; General government expenditure; growth performance; user cost of capital; tax depreciation allowance; ICT sector; Income; Labor markets; Corporate taxes; Europe; Northern Europe; Global; Western Europe; Baltics; per capita income; wage dispersion; earnings distribution; report Sweden; transfer income; Corporate income tax
Cover IMF Staff Country Reports
Finland: Selected Issues
International Monetary Fund
This Selected Issues paper reviews some features of the labor market in Finland during the 1990s. In particular, it reviews patterns of employment and wage distribution across sectors. The paper describes the main regulatory features and formal structure of labor market arrangements: the wage negotiation process, employment legislation, income replacement regulations for the unemployed, and the recent changes in these areas introduced by the government. The paper also describes the structure of labor taxation, and reviews the theory and existing empirical evidence concerning the effects of taxation on labor market outcomes.
Keywords:
ISCR; CR; wage; nominal exchange rate; wage negotiation process; EU country; negotiation; capital income; terms of trade shock; wage agreement; negotiation process; EMU monetary policy; Wages; Labor taxes; Employment; Income; Corporate income tax; Europe; Western Europe