nep-pbe New Economics Papers
on Public Economics
Issue of 2005‒09‒02
three papers chosen by
Peren Arin
Massey University

  1. THE FLAT TAX REFORM: A GENERAL EQUILIBRIUM EVALUATION FOR SPAIN By Marta González; Josep Pijoan-Mas
  2. Optimal Sin Taxes By Ted O'Donoghue; Matthew Rabin
  3. An explanation of inefficient redistribution: Transfers insure cohesive groups By Echenique, Federico; Eguia, Jon X.

  1. By: Marta González; Josep Pijoan-Mas (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: This paper quantifies the macroeconomic and distributional implications of an array of flat tax reforms for Spain. A standard general equilibrium economy with heterogeneous agents is used to infer the behavioral parameters of individuals and to evaluate the impact of the tax reforms. We find that a revenue neutral reform with a marginal tax equal to 17.42% and a fixed deduction equal to 15% of per capita income will yield increases in aggregate consumption and labor productivity equal to 7.6% and 2.5% respectively. Admittedly, this type of reforms also generate increases in the gini indices of after tax income and consumption. However, a revenue neutral flat tax reform with a marginal tax equal to 23.37% and a fixed deduction equal to 35% still displays aggregate gains and has the good property that people in the lowest quintile of wage distribution pay lower taxes and enjoy higher consumption than under the current income tax.
    Keywords: Income tax, policy reform, heterogeneous agents, general equilibrium.
    JEL: H31 E62 D31 C68
    Date: 2005–05
    URL: http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2005_0505&r=pbe
  2. By: Ted O'Donoghue; Matthew Rabin
    Date: 2005–08–31
    URL: http://d.repec.org/n?u=RePEc:cla:levrem:784828000000000346&r=pbe
  3. By: Echenique, Federico; Eguia, Jon X.
    Keywords: inefficient redistribution, cohesion, insurance, sectoral subsidies, trade policy, collective action
    Date: 2005–08
    URL: http://d.repec.org/n?u=RePEc:clt:sswopa:1234&r=pbe

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