경제자유화 정도에 따른 내재적 조세의 실현가능성: Heritage Foundation의 경제자유화지수를 중심으로

Abstract

There is no theoretical implicit taxes in the perfect competitive market. Some frictions and entry barriers occur due to government policy and imperfections of supplier and demander. So, many prior papers argue that implicit taxes exist in present market. We investigate the effects of EFI (Economic Freedom Index of Heritage foundation) on the realization of implicit taxes. According to Scholes et al. (2009), Implicit tax is the result of interaction between tax subsidies and market structure. However, in general, it is not likely for implicit tax to be realized because of incomplete competitive market factors. Also, many prior studies argue that realization of implicit tax can be impossible due to market friction and entry barriers in the market. Especially, this paper implements assumptions that EFI can reflect these market frictions and entry barrier. The purposes of this paper are to analyze the difference of the possibility of implicit taxes accordance with the market conditions in Korea. In other words, employing the result of the EFI from the Heritage Foundation which announce the index of each country every year, we investigates that EFI of Korea affects the pretax tax benefit of equity and the pretax return of equity. We execute this empirical analysis using a data set containing virtually all Korean publicly listed firms (including KSE and KOSDAQ) for the period 2000~2010. And the results of this study are as following; First, contrary to the implicit tax hypothesis, the empirical results demonstrate that most tax benefits are retained by the KSE and KOSDAQ firms. This results supports domestic prior papers. Second, we find a significantly positive relation between EFI and the possibility of implicit taxes. EFI is composed of many variables in four categories, which are Rule of law, Limited government, Regulatory efficiency and Open markets. Among these, we examines the relations between the possibility of implicit taxes and specific variables, such as Business Freedom, Trade Freedom, Fiscal Freedom, Government Spending, Monetary Freedom and Freedom from Corruption. Four variables, Business Freedom, Trade Freedom Fiscal Freedom and Monetary Freedom, have positive relations with the possibility of implicit taxes and other two variables, Government Spending and Freedom from Corruption, have negative relations with this possibility. According to two analysis, we divided the samples by the KSE and KOSDAQ. There is distinction of significant variables in each market. the possibility of implicit taxes have positive relations with Business Freedom in KSE, otherwise, negative relations with Government Spending in KOSDAQ. Thus, it says that firms in KOSDAQ, comparing KSE, receive lots of subsidy and tax benefit. In shorts, higher EFI can enhance the possibility to realize implicit taxes because EFI can be reflected by complete competitive market conditions. The viewpoint of this research has the strong merits that reflects the real market status comparing the prior literatures which employes many assumptions to set the perfect competition market status. However, there is little researches about the variables, EFI, in Korea, the limitations of the interpretations of the result. Therefore, we expect more researches that can bring out the relationship between research and the other tax variables