Progressive tax policies for companies in Ecuador: evidence in survival and collection

Abstract

The aim of this research is to define progressive tax policies for companies in Ecuador. For this purpose, the survival of the companies is measured based on the incidence in the collection. To analyze the theoretical perspectives with the empirical results, two models were made that cover the determinants of the income tax caused [I] and the determinants of the Bankruptcy risk of the companies (Z Altman) [II] based on balanced panel data. In Model [I] it is found that a higher level of income and assets translates into a higher income tax caused, and in Model [II] it is found that, in contrast to the neoclassical theory, a higher tax on the income caused does not imply a worse performance in the Bankruptcy risk, given that its coefficient is positive. The age of the companies has a quadratic behavior, that is, the companies have a lower Bankruptcy risk as they gain experience, but this does not tend to infinity, but at a certain point the experience is not enough to remain in the market. For the Ecuadorian case, it is recommended to carry out a progressive tax reform.