Q and the tax bias theory: the role of depreciation tax shields

Article Abstract:

A tax bias in Q is the ratio of the value of assets in capital markets to the current cost of assets. The tax bias in Q exists when productive assets yield the same after-tax cash flows. The value of the after-tax cash flow is overstated when existing asset prices are valued at new investment prices since this is an extension of preferential tax treatment. The tax bias does not entirely rely on the magnitude of the depreciation tax shield, unlike relevant movements of Q which does rely on the magnitude. The tax bias is not sufficiently powerful to confute inferences on unadjusted Q.

Investments, Savings, Depreciation

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Commodity taxation with administered and free market prices: theory and an application to China

Article Abstract:

The behavior of commodity taxes in a mixed economy characterized by centralized production with price controls for some commodities and a market-influenced policy for other commodities is discussed. An economic model was drawn up to delineate the theory, and the Chinese economy was chosen as the focus of empirical testing. Results show that backward shifting of taxes can create an income redistribution change which, in turn, leads to tax policy modifications. The reaction of tax policy to such factors as food rations, inequality, and revenue requisites is likewise evaluated.

China, Economic policy, Commodities

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From the static to the dynamic: some problems in the theory of taxation

Article Abstract:

Economic theories on taxation are generally grounded on static assumptions and criteria and their applicability has to be tested in a dynamic context. Taxation theories can be seen in the light of existing theories of economic growth. There often problems in properly analyzing such theories. Conflict between the normative and the actual have to be reconciled in the course of empirically testing theories.

Models, Equilibrium (Economics)

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