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Class of 2013 Abstract / Specific Aims: To assess the association between marginal tax rates (MTR) and innovative output of biotechnology firms. The MTR plays an important role in firms’ financing choices. Assessment of a firm’s tax status may reveal how firms decide on investment policies that affect R&D. Methods: A retrospective database analysis was used. Subjects included were firms within the biotechnology sector with the Standard Industrial Classification code of 2836 from 1980 - 2011. MTR Data was obtained from the S&P Compustat database, and Patent data was obtained from the U.S. Patent and Trademark Office. Changes in MTR’s on outcomes of patents were analyzed by performing an inferential analysis. Generalized estimating equations (GEE) were used, specifically utilizing a GEE regression with a negative binomial distributional family with log link, independent correlation structure and robust standard error variance calculation. Patents were regressed by the lagged change in MTR, after interest deductions. Main Results: The lag years 2 and 5 of the MTR change were statistically significant, (p = 0.031) and (p = 0.026) for each model respectively. Every one unit increase in the change of the MTRs was associated with large and significant drops in patents 78.8% (IRR = 0.212), 90.7% (IRR = 0.093), 92.7% (IRR = 0.073) at year 2 lag and 84.8% (IRR = 0.152), 92.6% (IRR = 0.074) at year 5 lag. Conclusion: An increase in the change of the MTR results in significant drops in patenting activity.

This dissertation contains two separate essays on the implications of the complex financial reporting rules of stock option compensation outlined under ASC 718. The first essay examines the effect of the tax benefit from employees' exercise of stock options on the cash effective tax rate. While not explicitly stated, many tax avoidance studies implicitly want to investigate tax avoidance that is the result of firms' intentional choices. Although stock option exercise reduces firms' tax burden, the firm does not control the timing of option exercise and the accompanying tax benefit. When the realized tax benefit deviates from the firm's expected cost, stock option exercise results in unanticipated changes in the cash taxes paid. The cash effective tax rate (CASHETR), a common measure of tax avoidance, reflects both the anticipated and unanticipated cash tax savings from employees' exercise of stock options. CASHETR's inclusion of unanticipated cash tax savings mismeasures intentional tax avoidance. Using both parametric and non-parametric analysis I show that the unanticipated tax benefit from employees' stock option exercise can cause firms to be identified as more aggressive tax avoiders. I also show that, among other differences, firms with greater unanticipated tax benefits from employees' exercise of stock options are more profitable, are less levered, have more extensive R&D, and have larger market-to-book ratios. Because these firm characteristics are often used as controls in studies of tax avoidance, the relationship between them and CASHETR's mismeasurement of intentional tax avoidance creates an endogeneity problem for researchers and could lead to incorrect inferences. I use a research simulation to inform researchers of an implication of this endogeneity concern when CASHETR is used to measure firms' intentional tax avoidance. I construct a hypothetical firm characteristic that is correlated to varying degrees with stock growth. This hypothetical firm characteristic represents a number of firm operating characteristics that could be variables of interest in studies of tax avoidance. Using a common model of tax avoidance, I test the null hypothesis that this hypothetical firm characteristic is not a determinant of tax avoidance. I show CASHETR's inclusion of the unanticipated tax benefits from employees' exercise of stock options leads to inflated rejection rates of the null hypothesis and can change inferences about determinants of intentional tax avoidance. Tax avoidance researchers can avoid the problems caused by the unanticipated tax benefit from stock options in two ways. First, they can use the effective tax rate for financial reporting purposes (GAAPETR). Because the financial reporting rules prohibit firms from including the unanticipated tax benefit from stock options in the calculation of the firm's tax expense, the unanticipated tax benefit from stock options does not affect GAAPETR. Second, researchers can use the excess tax benefit from the exercise of stock options disclosed by firms to adjust CASHETR to remove these unanticipated cash tax savings (CASHETRWITHOUT). The second essay in this dissertation examines the difference between firms' recognized and realized costs from stock option compensation. Under ASC 718 a firm recognizes the estimated value of stock options at their grant date as an expense for financial reporting purposes. This estimate often differs from the realized cost of the stock options, which consists of the cash proceeds forgone because the stock is issued to an option holder at a below-market exercise price. When ASC 718 was implemented, critics contended that these reporting rules allowed firms to avoid recognizing the full amount of wealth transferred from shareholders to employees. Consistent with this concern, I find that the realized cost of stock options exceeds the recognized cost of options for the median firm in my sample by $0.99 million, or 1.46 percent of pretax book income, in each year of my sample period. This translates into a wealth transfer from shareholders to employees in each year of my sample period of three cents per share in excess of recognized costs for the median firm. I also find that the realized cost from stock option compensation exceeds the recognized cost by $7.8 million, or 4.96 percent of pretax book income, in each year of my sample period for twenty-five percent of firms. The shareholders of these firms are transferring to employees 11.58 cents per share in excess of the recognized cost of stock options in each year of the sample period. Overall, these results suggest that firms using stock option compensation generally avoid recognizing the full realized cost of stock options.

I investigate the impact of statutory tax rates on U.S. firms' environmental performance. Prior literature emphasizes the effect of manager influence on the relation between tax avoidance and environmental activities. However, it is unclear how taxes imposed on a firm impact environmental performance. Firms subject to higher statutory tax rates experience more restricted cash flows. As such, higher statutory tax rates may limit managers' ability to address environmental concerns. Firms that experience higher statutory tax rates may not prioritize environmental efforts, which are often non-essential to a firm's operations, despite government incentives. Alternatively, higher tax rates may encourage firms to address environmental concerns due to the tax shield that these expenses provide and the relatively lower cost to shareholders. Observing tax rate variation at the state level, I find higher state tax rates are associated with weaker environmental performance. My study contributes to regulators' understanding of the interaction between tax policy and firms' abilities to address their environmental impact. / Doctor of Philosophy / I investigate the impact of statutory state income tax rates on U.S. firms' environmental performance. Firms subject to higher tax rates experience more restricted cash flows. As such, higher tax rates may limit managers' ability to address environmental concerns. Alternatively, higher tax rates may encourage firms to address environmental concerns due to the tax write off that these expenses provide. Observing tax rate variation at the state level, I find higher state tax rates are associated with weaker environmental performance. My study contributes to regulators' understanding of the interaction between tax policy and firms' abilities to address their environmental impact.

The diploma thesis on topic The impact of the economic crisis on the difference between the effective and statutory tax rate in the Czech Republic deals with the issue above the nominal and effective tax rates on corporate income during the economic crisis, specifically between years 2006 and 2015. The thesis deals with the causes of these differences between rates during each year of the crisis, and there is also comparison among the Czech Republic and European Union countries. First the work mentioned problems related to the last economic crisis, not only globally but also in terms of the Czech Republic. The following is a basic characteristic of the tax on corporate income, the share of total taxes over the years and the most important changes in the Law on Income Tax in the Czech Republic in individual years. In conclusion there is displayed the development of implicit and statutory tax rates and an analysis of the differences between these two rates.

The aim of the thesis is to evaluate whether is there a convergence in the tax systems of the EU Member States or not. The first chapter describes a development in a process of tax coordination and harmonization of the EU Member States. The next chapter focuses on a description and comparison of the current state of the tax systems in the European Union. The third chapter deals with the statistical evaluation of the development of individual variables - overall tax quota, tax quota of individual taxes, implicit tax rates, statutory tax rates, for individual taxes and a group of taxes between 1995 and 2011 period. The fourth chapter summarizes the results of the analysis.

Doctor of Philosophy / Department of Economics / Steven P. Cassou / Although geographic proximity is not enough to imply similar social, political and economic outcomes, the Portuguese and Spanish development experiences have been quite alike since the 15th century and in particular during the post-WWII period. Since 1950, both countries went through significant market transformations, ranging from democratization to market liberalization and adhesion to the European Union. However, even today, these economies, and in particular Portugal, do not rival those of the more developed European countries. This dissertation contributes to the growing body of literature on the Iberian economies by presenting three essays that employ modern macroeconomics tools to further our understanding about the growth and development experiences of these countries. The first essay provides a detailed growth accounting exercise and reconciles the results with the political and socioeconomic context of the 1950-2004 period. Since Total Factor Productivity is identified as the main engine of growth, the second essay explores a quantitative measure for the level of barriers that each country faced in the process of adopting new technologies. The numerical experiments suggest that Spain had consistently lower barriers than Portugal and that the gap has been increasing since the establishment of the European Single Market. The last essay investigates the role of fiscal policy and, specifically, if distortionary taxes on capital and labor income may have been a key factor behind the observed volatility for factor inputs. The simulation results derived from several potential scenarios support this conjuncture. Additionally, the last essay contributes by offering a time series for the levels of effective tax rates on labor and capital income in the Iberian economies over the 1975-2004 period.

The purpose of this study is to analyze the system of personal income taxation in Nigeria, especially with respect to its administration, equity, and effects on efficient resource usage. There have, in the past, been numerous complaints that the personal income tax in Nigeria does not yield enough revenue for the state governments, primarily because of widespread avoidance and evasion of the tax, especially by persons who do not derive income from wages and salaries. This study examines this problem in light of questions as to how the tax evolved, how important it is to state governments, how efficient and equitable it is, what administrative problems it faces, and what reforms can be implemented to best solve existing problems.

In the recent days, there has been culminating a laic and professional discussion to the topic of the fiscal reform in the Czech Republic. A necessary part of a potential public finance reform is then a tax reform, as well. The submitted paper contains an analysis of fundamental approaches to taxes and their structure from the synthetic point of view of legal and economic science, which has had a long tradition since Czech national economists of the first republic. An objective of the paper is an attempt to promote a scientific methodically balanced approach, as well, namely in the ontological sense, but also in the sense of teleological and normological gnoseology. The above mentioned then enables to modify some recommendations for central authorities in the field of legislative changes and tax policy. The objective of the paper is, on basis of an own empirical analysis, to reformulate recommendations for lawmakers and tax policy makers in the Czech Republic in terms of possible de lege ferenda changes. The conclusions of this paper can be summarized into five key recommendations for lawmakers and tax policy makers in the Czech Republic. They are: a recommendation of non- increase of the overall tax burden or, as the case may be, of effecting its decrease, of decrease of employment tax burden, and...

Policy makers in the Southeast Asian region are faced with many challenges in national policy taxation from globalization, in particular the increasing cross-border mobility of capital. One of the challenges is the competition to attract a mobile capital base which leads to a trend towards declining statutory corporate taxation rates and a pressure to harmonize taxation policy. This study explores taxation literature and uses empirical evidence from the period of 1996-2006 to examine tax competition and tax harmonization in the region. The study seeks evidence for the existence of tax competition by analyzing recent trends in two groups of measures of taxation: tax rates and tax revenues. This begins with looking at the trends of statutory corporate tax rate. Evidence is found for a decline in statutory corporate tax rates, developments commensurate with the existence of tax competition. On the contrary, the tax revenue data presented here, show that the expected decline in total tax revenues has not occurred; indeed, a significant increase has been recorded. It is also supported by empirical evidence of the ratio of corporate tax revenue either relative to GDP or to total tax revenue. The strengthening of these revenues has meant that the expected shift in the tax burden away from mobile to immobile factors has also failed to materialize. The two groups of measures of taxation thus provide apparently inconsistent views of the impact of tax competition. There follows an analysis of the elements of tax competition according to literature, in an attempt to draw out its implications for the experience within the Southeast Asian region. This study also examines the case for tax harmonisation and the Southeast Asian experience and it is concluded that the progress of tax harmonisation between countries has tended to be difficult to achieve because of the differences among the countries in terms of the tax structures and level of economies.