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The Study on Corporate Marginal Tax Rates in Taiwan
Marginal tax rate;Random walk with drift model;Mean reverting model
|Issue Date:||2017-11-15 14:52:50 (UTC+8)|
Marginal tax rate conveys relevant information for the firms’ financial decision-making. This study aims to estimate marginal tax rates via both random walk with drift model (RWM) and mean reverting model (MRM). Specifically, the settings incorporate taxable incomes with the five-year net operating losses carry-forward. To gain empirical efficiency, I explore the simulated marginal tax rates of 1995 for the listed companies in Taiwan with the test statistics and inferences. The results are four-fold. First, the RWM marginal tax rate (EMTR) estimates are better when the real marginal tax rates (RMTRs) are at the 0% level; the MRM EMTR estimates are better when RMTRs are between 0% and 25% level; both models perform equally well when RMTRs are at the 25%. Second, statutory rates are better substitutes for the EMTRs when RMTRs are at the 0% or 25% level; yet EMTRs by MRM are better substitutes when RMTRs are between 0% and 25% level. Third, the effective tax rates fail to substitute for the EMTRs at any level of RMTRs. Fourth, the study provides evidence consistent with the notion that the corporate marginal tax rate reaches the lowest level at the negative condition of current taxable income with cumulative net operating loss and the highest one at the positive condition with no cumulative net operating loss.
|Relation:||會計評論, 36, 89-104|
|Appears in Collections:||[會計評論] 期刊論文|
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