nep-pbe New Economics Papers
on Public Economics
Issue of 2008‒06‒13
ten papers chosen by
Oliver Budzinski
Philipps-University of Marburg

  1. The Taxman Tools Up: An Event History Study of the Introduction of the Personal Income Tax in Western Europe, 1815-1941. By Aidt, T.; Jensen, P.S.
  2. More realistic estimates of revenue changes from tax cuts By Thor O. Thoresen, Jørgen Aasness and Zhiyang Jia
  3. Estimating Revenue Losses Evolve from Tax Evasions in Bangladesh: By AKM Matiur Rahman and Sabera Yasmin
  4. Validation of the Regional Authority Index By SCHAKEL , ARJAN H.
  5. Optimum taxation of inheritances By Johann K. Brunner; Susanne Pech
  6. In Search of the European Public Sphere: Between Normative Overstrech and Empirical Disenchantment By Hans-Jörg Trenz
  7. Horizontal Inequity and Vertical Redistribution with Indirect Taxes: the Greek Case By Kaplanoglou, G.; Newbery , D.M.
  8. Pork Barrel Politics in Postwar Italy, 1953–1994. By Golden, M.; Picci, L.
  9. A Moral Approach to Global Warming Policy By Seo, S. Niggol
  10. The Efficiency of Direct Public Involvement in Environmental Policymaking: An Experimental Test By Christopher Bruce; Jeremy Clark

  1. By: Aidt, T.; Jensen, P.S.
    Abstract: The introduction of income taxation was a landmark in the development of the fiscal state in Western Europe and elsewhere. This paper presents an event history study of the adoption of the income tax in 11 Western European countries between 1815 and 1941. We find evidence that social learning, reductions in tax collection costs and to a lesser extend spending pressures played a significant role for the adoption decision. Surprisingly, we also .nd evidence that the extension of the franchise reduced the likelihood of adoption of the income tax.
    Keywords: Voting franchise, social learning, tax collection technology, public finance, income taxation.
    JEL: D7 H1
    Date: 2007–10
  2. By: Thor O. Thoresen, Jørgen Aasness and Zhiyang Jia (Statistics Norway)
    Abstract: Procedures of revenue estimation of changes in the personal income tax are discussed. Using revenue estimates of the 2006 tax cuts in the personal income tax in Norway as an example, we show that estimates of costs of cuts differ substantially when different effects are brought into consideration. Estimates of revenue effects which take labor supply responses and effects through indirect taxation and corporate taxes into account are presented and contrasted with estimates obtained by current procedures. Our estimates indicate that a substantial part of the initial outlay is returned; approximately 56 percent comes back as increased tax revenues from other tax bases and increased personal income tax following from labor supply adjustments.
    Keywords: tax revenue estimates; scoring procedures; microsimulation
    JEL: H24 H31
    Date: 2008–05
  3. By: AKM Matiur Rahman and Sabera Yasmin (American International University-Bangladesh (AIUB); Dhaka University, Bangladesh)
    Abstract: This empirical study estimates the revenue losses derived from different categories of taxpayers who used Self-assessment System (SAS) under direct taxation in Bangladesh. Even though a small portion of populations live in urban areas (over 80 percent live in rural areas) that used the SAS in filing tax-returns, they significantly contributed to the problem. Revenue loss due to these taxpayers’ noncompliance with laws of income is a growing problem where the past five year (2000-2004) data statistics suggested that the Private Ltd Companies and Public Ltd Companies contributed significantly to accelerating the problem. With governmental ongoing various measures including the provision of SAS that was designed to encourage taxpayers for compliance, the tax-evasion issue in Bangladesh is critical and it deserves attention without delay.
    Date: 2008–06
    Abstract: This article validates the Regional Authority Index with seven widely used decentralization indices in the literature. A principal axis analysis reveals a common structure. The major source of disagreement between the Regional Authority Index and the other indices stems from the fact that the Regional Authority Index does not include local governance whereas most other indices do. Two other sources of disagreement concern the treatment of federal versus non-federal countries, and countries which have recently regionalized and/or have asymmetrical regions, whereby the more fine-grained Regional Authority index captures greater variation. The second part discusses content validity of fiscal indicators.
    Keywords: federalism;decentralization;regional authority; fiscal indicators
    JEL: A12 G18 H72 H71
    Date: 2008–02
  5. By: Johann K. Brunner (Department of Economics, Johannes Kepler University Linz, Austria); Susanne Pech (Department of Economics, Johannes Kepler University Linz, Austria)
    Abstract: We incorporate the fact that inheritances create a second distinguishing characteristic of individuals, in addition to earning abilities, into an optimum income taxation model with bequests motivated by joy of giving. We show that a tax on inheritances and a uniform tax on all expenditures including bequests are equivalent and that either is desirable, according to an intertemporal social objective, if on average high-able individuals have larger inherited endowments than low-able. We demonstrate that such a situation results as the outcome of a process with stochastic transition of abilities over generations, if all descendants are more probable to have their parent’s ability rank than any other.
    Keywords: inheritance tax
    JEL: H21 H24
    Date: 2008–04
  6. By: Hans-Jörg Trenz
    Abstract: The attempt to pin down the constitutive elements of the European public sphere is typically marked by ambivalence between normative and descriptive elements. In normative terms, the European public sphere is identified through the standards which should be used to assess the legitimacy of European integration. In descriptive terms, the European public sphere is identified through the actors, institutions, and communicative processes which guide the practice of collective self-understanding of the Europeans. This article argues that the tension between normative standards and legitimating practice should be considered as constitutive for the emergence of a European public sphere. Against recent attempts to define the European public sphere in purely descriptive terms, this implies the need to re-introduce the normativity of the public sphere as part of the dynamics of an evolving communicative space in Europe. It is precisely this practice of legitimation and delegitimation that makes the European public sphere thinkable as a (still unfinished) project and that accounts for its dynamic expansion.
    Keywords: democracy; discourse; European public space; legitimacy; media; normative political theory; public opinion
    Date: 2008–05–15
  7. By: Kaplanoglou, G.; Newbery , D.M.
    Abstract: Non-uniform indirect taxes treat equals and those unequal differently (horizontal inequity and vertical redistribution). Horizontal inequity is caused by taste differences among similar households, but some excises are designed to reflect social, not revealed, preferences. We apply two methodologies for decomposing the overall redistributive effect of the present and three alternative indirect tax structures into vertical and horizontal effects for Greece, using the Household Expenditure Survey micro-database. In all cases the taste component is considerable, even when we allow for social preferences, while improvements in vertical redistribution can be achieved, albeit at the cost of increased horizontal inequity.
    Keywords: distributional effect of taxes, horizontal inequality, vertical redistribution, indirect tax reform, Greece.
    JEL: D63 H23 D30
    Date: 2008–01
  8. By: Golden, M.; Picci, L.
    Abstract: This paper analyzes the political determinants of the distribution of infrastructure expenditures by the Italian government to the country’s 92 provinces between 1953 and 1994. Extending implications of theories of legislative behavior to the context of open-list proportional representation, we examine whether individually powerful legislators and ruling parties direct spending to core or marginal electoral districts, and whether opposition parties share resources via a norm of universalism. We show that when districts elect politically more powerful deputies from the governing parties, they receive more investments. We interpret this as indicating that legislators with political resources reward their core voters by investing in public works in their districts. The governing parties, by contrast, are not able to discipline their own members of parliament sufficiently to target the parties’ areas of core electoral strength. Finally, we find no evidence that a norm of universalism operates to steer resources to areas when the main opposition party gains more votes.
    Keywords: Pork barrel, distributive politics, electoral systems, Italy, public spending, infrastructure.
    Date: 2007–09
  9. By: Seo, S. Niggol
    Abstract: This paper examines a widespread public belief on designing a global climate policy, that is, climate change is a moral issue and should be approached with an ethical standpoint. In this paper, I pose a question of whether a global public goods such as the control of greenhouse gases can be provided efficiently with the adoption of an ethical standard. This paper finds that a global climate policy cannot rely on ethics. The main reasons are existing knowledge gaps in climate change science and economics, heterogeneous economic agents and asymmetric information among them, and the economic reality of winners and losers from the implementation of a climate policy. For a policy to work individuals should be forced to pay an optimal carbon tax regardless of one being ethical or selfish. I relate the discussions to the examples of ‘faith based initiative’, ‘voluntary approach’, and ‘zero discounting’ analysis.
    Keywords: Climate Change, Global Public Goods, Carbon Tax, Morality.
    JEL: Q5 Q54
    Date: 2008–04–07
  10. By: Christopher Bruce; Jeremy Clark (University of Canterbury)
    Abstract: In one of the most ambitious forms of environmental decision-making, representatives of interested parties – environmentalists, developers, farmers, loggers, miners, etc. - are charged with the responsibility of developing a set of public policies that is acceptable to all of them. Although this approach has become increasingly popular, and has been widely discussed in the academic literature, little is known about the characteristics of the outcomes that are reached in this type of negotiation. We do not know, for example, whether these outcomes meet the standard criteria for efficiency or equity. In this paper, we use laboratory experiments to test whether a number of axiomatic models of bargaining can predict the behavior of the parties to environmental decision making. In recognition of the multi-dimensional aspect of most public land use conflicts, we ask pairs of subjects to negotiate over two goods, without the possibility of cash side payments. We thus provide one of the first experimental tests of a prediction associated with the Edgeworth Box: that parties with an initial endowment that is Pareto inefficient will make trades until they reach a Pareto efficient allocation. We further test whether parties in particular reach the Nash bargain when it coincides with or conflicts with outcomes that maximise the parties’ joint payoffs and with outcomes at which the parties’ receive equal payoffs. Finally, the effect of providing parties with full or partial information regarding payoffs is also examined.
    Keywords: Axiomatic models of bargaining; Experimental tests; Land use conflicts; Collaborative policymaking
    JEL: C92 D74 H41 J52 Q51
    Date: 2008–05–05

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