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on Public Economics |
| By: | Philipp Doerrenberg (CGS, University of Cologne); Andreas Peichl (IZA, University of Cologne, ISER and CESifo) |
| Abstract: | As the link between tax compliance and tax morale is found to be robust, finding the determinants of tax morale can help to understand and fight tax evasion. In this paper we analyze the effect of progressive taxation on tax morale in a cross-country approach - which has not been investigated before. Our theoretical analysis leads to two testable predictions. First, an individual's tax morale is higher, the more progressive the tax schedule is. Second, the impact of tax progressivity on tax morale is declining in income. In our empirical analysis, we make use of a unique dataset of tax progressivity measures and follow most of the tax morale literature by employing the World Values Survey to measure tax morale. Controlling for a wide range of variables, we confirm both hypotheses in our empirical analysis. |
| Keywords: | Tax Morale, Tax Compliance, Progressivity, Taxation, Redistribution |
| JEL: | H26 H24 D7 D31 |
| Date: | 2010–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:01-06&r=pbe |
| By: | Borissov, Kirill; Surkov, Alexander |
| Abstract: | We consider a Barro-type endogenous growth model in which the government’s purchases of goods and services enter into the production function. The provision of government services is financed by flat-rate (linear) income or lump-sum taxes. It is assumed that individuals differing in their discount factors vote on the tax rates. We propose a concept of voting equilibrium leading to some versions of the median voter theorem for steady-state equilibria, fully characterize steady-state equilibria and show that if the median voter discount factor is sufficiently low, the long-run rate of growth in the case of flat-rate income taxation is higher than that in the case of lump-sum taxation. |
| Keywords: | economic growth; voting; proportional; flat-rate; linear tax; lump-sum tax; heterogeneous agents; endogenous growth |
| JEL: | E62 H21 H31 H41 D91 D72 O4 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:27517&r=pbe |
| By: | Stefano Manestra (Banca d'Italia) |
| Abstract: | This study retraces the history of tax compliance in Italy from unification to today. We review the attempts at evaluating the gap between actual and potential tax revenue, from nineteenth-century descriptive statistics up until the formal estimates of recent decades, which distinguish lawful tax erosion from avoidance and evasion. Secondly, we analyze the explanations given and solutions proposed to increase tax compliance, grouping them into five "theses": excessive tax burden, structural deficiencies in specific taxes, inefficiency of tax administration, taxpayers’ reluctance and the complexity of tax laws. We also assess the changing attitudes of taxpayers towards tax and the tax authorities over the same period. The excursus shows that compliance problems are a long-term constant of the Italian tax system, even if their scale has diminished over time, at least in percentage terms. The problems have always originated from a specific group of taxpayers (self-employed workers and sole proprietorships). On the other hand the causes, and therefore the solutions to be taken into consideration, are complex and multifaceted. |
| Keywords: | tax compliance, tax evasion, tax history |
| JEL: | H2 N4 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_81_10&r=pbe |
| By: | Francisca Guedes de Oliveira (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto) |
| Abstract: | This paper intends to contribute to the literature by providing empirical evidence on the relation between public capital stock and government efficiency. We present some objective indicators fo government efficiency and explore the mentioned relation. we find a positive and significant relation between both variables that survives the introduction of controls and robustness checking. |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:cap:wpaper:012010&r=pbe |
| By: | Borys Grochulski |
| Abstract: | In this paper, we show that a simple, linear capital tax— the kind used in the Ramsey analysis— can be optimal in a Mirrlees economy with private information. We extend the Mirrlees approach to optimal taxation by studying taxes side-by-side with another institution, rather than in isolation. We consider an implementation in which agents use unsecured credit and personal bankruptcy to obtain insurance. Taxes are levied to fund government expenditures. An optimal tax system consists of lump-sum taxes and a simple Ramsey tax on wealth. In Mirrlees private information environments, optimal capital taxes do not have to be complicated. |
| Keywords: | Financial markets ; Financial institutions ; Bankruptcy |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:10-14&r=pbe |
| By: | Tang, Hsiao Chink (Asian Development Bank); Liu, Philip (Western Hemisphere Department); Cheung, Eddie C. (School of Arts and Social Sciences) |
| Abstract: | This paper investigates the effectiveness of fiscal policy in five Association of Southeast Asian Nations (ASEAN) of Indonesia, Malaysia, the Philippines, Singapore and Thailand. Through a structural vector autoregression (VAR) model, government spending is found to have weak and largely insignificant impact on output, while taxes are found to have outcomes contrary to conventional theory. Extensions using a time-varying VAR model reveal the impact of taxes on output mainly reflect heightened concerns over public finances amid the Asian financial crisis and the recent global financial crisis. On the other hand, for Singapore and Thailand, there is evidence that government spending can at times be useful as a tool for countercyclical policy. |
| Keywords: | ASEAN; fiscal policy; structural VAR; time-varying VAR |
| JEL: | C11 E62 H20 H30 |
| Date: | 2010–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbrei:0070&r=pbe |
| By: | Martin Fochmann (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Dirk Kiesewetter (Faculty of Economics and Management, JUlius-Maximilians University Würzburg); Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg) |
| Abstract: | Income taxation may not only affect investment behavior by distorting payoffs, it may also have a more subtle, psychological effect, by biasing investors' perceptions of the financial consequences. In a laboratory experiment that allows us to vary the taxation method, while keeping the financial outcomes constant, we find clear evidence that aggregated income taxation (comparable to profit taxation) with complete loss deduction induces a sustained bias towards more risk-taking, while disaggregated income taxation (comparable to a transaction taxation with loss offset) does not. We suggest that this bias may be exploited to increase the volume of private investments by choosing aggregated income taxation, if investors are (too) risk-averse, and to decrease the volume and the risk by choosing disaggregated income taxation, if investors are (too) risk-seeking |
| Keywords: | tax perception, risk-taking behavior, distorting taxation |
| JEL: | C91 D14 H24 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:mag:wpaper:100025&r=pbe |
| By: | Fortin, Bernard (Université Laval); Lacroix, Guy (Université Laval); Pinard, Dominique (Statistics Canada) |
| Abstract: | The main purpose of this paper is to estimate the size and the growth of Quebec’s underground economy, and the corresponding loss of taxes for the government. Our approach is based on a method developed by Pissarides and Weber (1989) and extended by Lyssiotou et al. (2004). The basic hypothesis is that individuals can under-report their earnings from self-employment but not from paid work, from which taxes are directly deducted. We estimate a consumer demand system in which the marginal propensity to consume is allowed to vary with the two types of earnings. We next estimate the amount of self-employment earnings that are under-reported. From this estimate, we calculate the relative size of the underground economy in Quebec. We use data from Statistics Canada's Survey of Household Spending. According to our results, Quebec's underground economy amounted to 4.6% of GDP in 1997 and increased slightly to 5.7% in 2002. For the government, this represents approximately $ 3.3 billion in forgone taxes for the year 2002. This estimate is very close to those reported by Gervais (1994) and Fortin and Lacroix (2009) using very different estimation methods and data. |
| Keywords: | underground economy, demand system, household behavior, generalized method of moments, tax evasion, income from self-employment |
| JEL: | D12 E26 H26 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5384&r=pbe |
| By: | Adriana Di Liberto; Stefano Usai |
| Abstract: | This paper proposes a fixed-effect panel methodology that enables us to simultaneously take into account both TFP and traditional neoclassical convergence. We analyse a sample of 199 regions in EU15 (plus Norway and Switzerland) between 1985 and 2006 and find the absence of an overall process of TFP convergence as we observe that TFP dispersion is virtually constant across the two sub-periods. This result is proved robust to the use of different estimation procedures such as simple LSDV , spatially corrected LSDV , Kiviet-corrected LSDV, and GMM à la Arellano and Bond. However, we also show that this absence of a strong process of global TFP convergence hides interesting dynamic patterns across regions. These patterns are revealed by the use of recent exploratory spatial data techniques that enable us to obtain a complete picture of the complex EU cross-regions dynamics. We find that, between 1985 and 2006, there has been numerous regional miracles and disasters in terms of TFP performance and that polarization patterns have significantly changed along time. Overall, results seem to suggest that a few TFP leaders are emerging and are distancing themselves from the rest, while the cluster of low TFP regions is increasing. |
| Keywords: | TFP; technology catching up; panel data; exploratory spatial data analysis |
| JEL: | C23 O33 O47 R11 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201030&r=pbe |
| By: | Michele Alacevich (Center for European Studies, Harvard University); Pier Francesco Asso (Università degli Studi di Palermo, Dipartimento di Scienze Economiche); Sebastiano Nerozzi (Università Cattolica, Milano) |
| Abstract: | The paper aims to describe the contribution of four Harvard economists to the interpretation of the Great Depression and the policy decision making from 1933 to 1938. Lauchlin B. Currie, Jacob Viner, John H. Williams, Harry D. White, eminent scholars in the field of monetary and international economics, were deeply involved in policy decisions during the New Deal. In our synoptic analysis we will benefit from extensive scholarly work that has been provided in the last few years. We shall examine the extensive biographical connection between Currie, Viner, White and Williams with special regard to their common training at Harvard. Then we shall compare their interpretations of the causes of crisis and their proposals in fiscal, monetary and banking policy. Finally, we shall describe their advisory activity in the Roosevelt administration and try to assess their influence. |
| Keywords: | Great Depression; Monetary Theory; Monetary Policy; Fiscal Policy, Keynesism |
| JEL: | B22 E32 E58 E63 N12 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2010_18.rdf&r=pbe |
| By: | Carlos Pinho (Departamento de Economia e Gestão Industrial, Universidade de Aveiro, GOVCOPP); Mara Madaleno (Departamento de Economia e Gestão Industrial, Universidade de Aveiro, GOVCOPP) |
| Abstract: | In this work we analyze, explore and measure two of the most important concepts for the theory of storable commodity markets. After analyzing the statistical properties of spot and futures EU ETS allowances for Germany and France, we model and test the risk premium and convenience yield for CO2 contracts accordingly to previous economic theories, for the period 2005-2009. Results indicate that convenience yields are positively related to the spot CO2 return while being negatively influenced by the spot volatility. This negative impact of spot volatility is also verified for the risk premium, with the latter varying positively with time to maturity. Contradicting previous empirical findings, we found only a positive influence of the convenience yield on the risk premium for the ECX French market and for Phase II contracts, leading us to conclude that results are Phase, market and data span dependent. Moreover, results are independent on the volatility forecast used and important for risk management purposes for allowances markets participants. Moreover, day-ahead markets for CO2 are in "normal contango" for the entire data period under analysis, contrary to previous empirical findings for the allowances market. |
| Keywords: | CO2 Emission Allowances; Volatility; Volume; Maturity; Convenience Yield; Risk Premium; Spot Prices; Futures Prices |
| JEL: | C22 C32 G12 G14 Q51 |
| Date: | 2010–12 |
| URL: | http://d.repec.org/n?u=RePEc:ave:wpaper:542010&r=pbe |