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Habit Persistence in Effective Tax Rates: Evidence Using Australian Tax Entities

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  • Mark N. Harris

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Simon Feeny

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

This paper uses administrative data from the Australian Tax Office, to model the effective tax rates (ETRs) of large Australian corporates. The extent to which there is any habit persistence in ETRs is also examined. The results suggest that unobserved entity heterogeneity is important in explaining ETRs. In terms of observed heterogeneity, entity size, level of leverage, capital intensity, foreign income and R&D, are all important explanators of ETRs. There is also evidence of a significant amount of habit persistence, implying that ETRs converge monotonically towards the statutory rate of corporation tax.

Suggested Citation

  • Mark N. Harris & Simon Feeny, 2000. "Habit Persistence in Effective Tax Rates: Evidence Using Australian Tax Entities," Melbourne Institute Working Paper Series wp2000n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2000n13
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2000n13.pdf
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    References listed on IDEAS

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    Cited by:

    1. Yinka Mashood Salaudeen* & Rafiu Olayinka Akano, 2018. "Non-Linearity in Determinants of Corporate Effective Tax Rate: Further Evidence from Nigeria," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 4(3), pages 56-63, 03-2018.

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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F18 - International Economics - - Trade - - - Trade and Environment

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