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This paper examines the role of minimum taxes and attempts to quantify their impact on economic activity. Minimum taxes can be effective at shoring up the corporate tax base and enhancing the perceived equity of the tax system, potentially motivating broader taxpayer compliance. Where political and administrative constraints prevent reforms to the standard corporate income tax, a minimum tax can help mitigate base erosion from excessive tax incentives and avoidance. Using a new panel dataset that catalogues changes in minimum tax regimes over time around the world, firm-level analysis suggests that the introduction or reform of a minimum tax is associated with an increase in the average effective tax rate of just over 1.5 percentage points with respect to turnover and of around 10 percent with respect to operating income. Minimum taxes based on modified corporate income lead to the largest increases in effective tax rates, followed by those based on assets and turnover.

Macroeconomics --- Economics: General --- Corporate Taxation --- Taxation --- Foreign Exchange --- Informal Economy --- Underground Econom --- Business Taxes and Subsidies --- Taxation, Subsidies, and Revenue: General --- Aggregate Factor Income Distribution --- Economic & financial crises & disasters --- Economics of specific sectors --- Corporate & business tax --- Public finance & taxation --- Corporate income tax --- Taxes --- Income --- National accounts --- Effective tax rate --- Tax policy --- Income tax systems --- Average effective tax rate --- Currency crises --- Informal sector --- Economics --- Corporations --- Tax administration and procedure --- Income tax --- Honduras

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This Selected Economic Issues paper examines economic developments in South Africa during 1993–94. After a cumulative fall of 3.5 percent between 1989 and 1992, GDP at market prices grew by 1.1 percent in 1993. The major contribution to growth came from the turnaround in the inventory cycle, with positive investment in inventories recorded for the first time since 1989. Private consumption expenditure remained subdued in 1993, rising by only 0.5 percent; by contrast, public consumption grew by 1.8 percent in 1993.

Labor --- Macroeconomics --- Money and Monetary Policy --- Taxation --- Industries: Financial Services --- Public Finance --- Taxation, Subsidies, and Revenue: General --- Wages, Compensation, and Labor Costs: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Social Security and Public Pensions --- Public finance & taxation --- Labour --- income economics --- Pensions --- Finance --- Average effective tax rate --- Marginal effective tax rate --- Wages --- Credit --- Labor taxes --- Tax policy --- Money --- Taxes --- Tax administration and procedure --- Income tax --- South Africa

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A methodology for computing effective average tax rates on factor incomes and consumption using OECD data from national accounts and revenue statistics is described and applied to construct time series of tax rates for the group of seven largest industrialized countries. These tax rates are compared with estimates of effective marginal tax rates obtained in other studies. The stylized facts that distinguish tax systems across countries are documented, and the co-movements between the tax rates and savings, investment, net exports, unemployment, and hours worked are also examined. The results of this analysis illustrate some of the potential implications of tax policies currently under consideration and suggest that the proposed tax rates are useful approximations to those faced by representative agents in dynamic macroeconomic models.

Personal Finance -Taxation --- Taxation --- Open Economy Macroeconomics --- Taxation, Subsidies, and Revenue: General --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Business Taxes and Subsidies --- Public finance & taxation --- Personal income tax --- Capital income tax --- Consumption taxes --- Average effective tax rate --- Income tax systems --- Taxes --- Tax policy --- Income tax --- Spendings tax --- Tax administration and procedure --- United States

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This paper examines the implications of inflation persistence for the inverted Fisher hypothesis that nominal interest rates do not adjust to inflation because of a high degree of substitutability between money and bonds. It is emphasized that the substitutability between nominal assets and capital renders the hypothesis inconsistent with the data when inflation persistence is high. Using a switching regression model, the analysis allows the reflection of inflation in interest rates to vary according to the degree of inflation persistence or forecastability. The hypothesis is supported by U.S. data only when inflation forecastability is below a certain threshold.

Banks and Banking --- Inflation --- Macroeconomics --- Taxation --- Model Construction and Estimation --- Interest Rates: Determination, Term Structure, and Effects --- Price Level --- Deflation --- Taxation, Subsidies, and Revenue: General --- Public finance & taxation --- Finance --- Marginal effective tax rate --- Inflation persistence --- Consumer price indexes --- Real interest rates --- Prices --- Tax policy --- Financial services --- Tax administration and procedure --- Price indexes --- Interest rates --- United States

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This Selected Issues paper conducts a comparative analysis of the main determinants of GDP per capita growth in New Zealand and in other OECD countries to assess the relative importance of macroeconomic factors, institutional settings, and geographical location in New Zealand’s growth performance during the last 30 years. The estimation results find strong support for the view that geographical isolation has significantly hampered growth in New Zealand. The paper also reviews the international experience with prefunding public defined-benefit pension schemes, with a focus on recent reforms in industrial countries—Canada, Ireland, Norway, and Sweden.

Foreign Exchange --- Inflation --- Labor --- Public Finance --- Taxation --- Nonwage Labor Costs and Benefits --- Private Pensions --- Social Security and Public Pensions --- Fiscal Policy --- Price Level --- Deflation --- Taxation, Subsidies, and Revenue: General --- Macroeconomics --- Pensions --- Public finance & taxation --- Currency --- Foreign exchange --- Banking --- Pension spending --- Fiscal policy --- Marginal effective tax rate --- Expenditure --- Prices --- Tax policy --- Tax administration and procedure --- New Zealand