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- Title
AN EMPIRICAL ESTIMATE OF CORPORATE TAX REFUNDABILITY AND EFFECTIVE TAX RATES.
- Authors
Mintz, Jack M.
- Abstract
The provisions of generous tax incentives during the 1970s and the recession of the early 1980s led to a marked increase in the number of nontaxable corporations in Canada. rates on capital income. This paper attempts to quantify the impact of imperfect loss offsetting or "refundability" on industry effective tax rate measurements. The extent to which firms use losses depends on several aspects of the tax law. In Canada the most important are the provisions that allow, either explicitly or implicitly, losses to be carried back or carried forward. The explicit rule is that business losses may be carried back three years and carried forward, at no rate of interest, for seven years. The present value of losses written off over time must be adjusted to include undeclared deductions. The Canadian corporate tax is levied by federal and provincial governments on the net income earned by a corporation. Net income is equal to accrued revenues net of wages, current expenditures, depreciation, and nominal borrowing costs. Inventories are valued according to First-in First-out principles except for agriculture firms that use cash accounting.
- Subjects
CANADA; CORPORATE tax accounting; ACCOUNTING; TAXATION; BUSINESS losses; COMMERCIAL law; PRODUCT management; INCOME tax deductions for losses; INTEREST rates
- Publication
Quarterly Journal of Economics, 1988, Vol 103, Issue 1, p225
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1882651