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on Public Economics |
| By: | Andrea Filippo Presbitero (International Monetary Fund, Universit… Politecnica delle Marche - MoFiR); Agnese Sacchi (Faculty of Economics - Universitas Mercatorum (Rome, Italy);, Governance and Economics Research Network, University of Vigo (Spain)); Alberto Zazzaro (Universit… Politecnica delle Marche, MoFiR) |
| Abstract: | This paper investigates the effects of property taxation on fiscal discipline for a sample of OECD countries over the period 1973-2011. We find that aggregate property taxation in total tax revenues is not statistically correlated with the primary surplus-to-GDP ratio. In contrast, a greater reliance on property taxes pertaining to sub-national governments contributes to fiscal discipline, suggesting that fiscal decentralization should favor responsive tax base instruments. |
| Keywords: | Fiscal imbalance, Property tax, Sub-national governments, Tax decentralization |
| JEL: | E62 H62 H71 H77 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wmofir:95&r=pbe |
| By: | Blaufus, Kay; Hechtner, Frank; Möhlmann, Axel |
| Abstract: | Tax preparation firms advertise their services as a way to save taxes. To investigate this subject, we use a panel of German income tax accounting data, consisting of employees and other taxpayers with non-business income, to explore the relationship between expenses for tax preparation and tax liabilities. We find a negative link with expenses exceeding estimated tax savings. Specifically, one additional Euro yields an estimated tax savings of 72 cents in an OLS regression and 24 cents in a fixed-effects regression. This finding indicates that cross-section estimates are upward biased. The magnitude of the effect implies that tax preparation expenses are not worthwhile from a tax saving perspective alone. In consideration of time savings, combined tax and time savings also do not exceed expenses for any income quintile. The result is robust to various alternative specifications such that in no setting do the pecuniary and time savings exceed the tax preparation expenses. Overall, our findings suggest an important benefit of tax preparation expenses beyond tax and time savings. -- |
| Keywords: | response to taxation,tax advisors,tax return preparation,tax preparation expenses |
| JEL: | H24 H31 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:157&r=pbe |
| By: | Bhattacharyya, Chandril |
| Abstract: | This paper develops a two sector model of endogenous economic growth with public capital where private goods and public investment goods are produced with different production technologies. The government buys public investment goods produced by private producers; and the government is a monopsonist in this market. We analyse properties of growth rate maximizing and welfare maximising fiscal policies in the steady state equilibrium. It is shown that the government cannot (can) control the production of public investment good changing the income tax rate (price of public investment good). The growth rate maximizing price of the public investment good is not necessarily equal to its competitive price. However, growth rate maximising income tax rate is equal to the elasticity of private good’s output with respect to public capital but is independent of technology in public good production. Welfare maximising solution is not necessarily identical to the growth rate maximising solution even in the steady state equilibrium. |
| Keywords: | Income taxation; Price of public good; Endogenous growth; Steady-state equilibrium; Public capital |
| JEL: | H21 H41 O41 |
| Date: | 2014–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55728&r=pbe |
| By: | Brandstetter, Laura |
| Abstract: | This paper analyzes whether a corporate tax cut reduces profit shifting to low-tax countries. I use firm-level data of 2,812 German corporations around the Business Tax Reform in 2008. Applying a difference-in-differences framework with a one-on-one matching strategy, which compares earnings of multinational and domestic corporations, I do not find empirical evidence that even a 10 percentage points cut in the business tax rate leads to a reduction of profit shifting activities. -- |
| Keywords: | corporate taxation,international profit shifting |
| JEL: | F23 H25 H26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fubsbe:201410&r=pbe |
| By: | Liu, Xin |
| Abstract: | This paper analyses a game theoretic model of tax competition in a system where tax authorities are revenue optimisers and countries are differentiated by size. The model accommodates more than two countries. In equilibrium, larger countries set higher tax rates non-cooperatively. By applying the Hotelling linear model, this paper gives examples where the size effect, neighbourhood effect, and peripheral effect coexist and push up the tax rate in equilibrium. -- |
| Keywords: | tax competition,cross-border shopping,Nash equilibrium,peripheral effects |
| JEL: | H20 H71 H73 R51 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201419&r=pbe |
| By: | Christophe Blot (OFCE); Marion Cochard (OFCE); Jérôme Creel (OFCE); Bruno Ducoudre (OFCE); Danielle Schweisguth (OFCE); Xavier Timbeau (OFCE) |
| Abstract: | Recent evidence has renewed views on the size of fiscal multipliers. It is notably emphasized that fiscal multipliers are higher in times of crisis. Starting from this literature, we develop a simple and tractable model to deal with the fiscal strategy led by euro area countries. Constrained by fiscal rules and by speculative attacks in financial markets, euro area members have adopted restrictive fiscal policies despite strong negative output gaps. Based on the model, we present simulations to determine the path of public debt given the current expected consolidation. Our simulations suggest that despite strong austerity measures, not all countries would be able to reach the 60% debt-to-GDP. If fiscal multipliers vary along the business cycle, this would give a strong case for delaying austerity. This alternative scenario is considered. Our results show not only that delaying austerity would improve growth perspectives and would not be incompatible with public debt converging to 60% of GDP. |
| Keywords: | public debt; fiscal multipliers; debt |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/2g7mhju69b94obeaqlen09s1au&r=pbe |
| By: | Richard England; Min Qiang Zhao; Ju-Chin Huang |
| Abstract: | Decisions about residential lot size and square footage are influenced by a variety of determinants ranging from zoning regulations to neighborhood characteristics. Our theoretical analysis suggests that the property tax rate could also affect residential lot sizes and the sizes of newly constructed houses. Using descriptions for over 36 thousand houses built in New Hampshire between 1985 and 2006, we find empirical evidence that higher property taxes are indeed associated with both smaller lots and smaller houses. On average, higher property tax rates are associated with more additional living space per newly developed acre. These effects are modest in magnitude, however. |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002186&r=pbe |
| By: | Piyush Chandra; Cheryl Long |
| Abstract: | A destination-based VAT system without a complete export tax rebate is detrimental to a country's exports, while an increase in the VAT rebate rate helps reduce the negative effects. In this paper, we study the role of VAT rebates in affecting Chinese exports using firm-level panel data for 2000–2006. To address potential endogeneity, we rely on a quasi-natural policy experiment in 2004, when the fiscal conditions of local governments became important in determining the actual VAT rebate rates for exports. The empirical findings demonstrate significant and large effects of VAT rebates on export volume. On average, for each percentage point increase in the VAT rebate rate, the amount of exports increased by 13%, which translates into an additional $4.70 of exports for each $1 of export tax rebates paid. |
| Keywords: | VAT rebate, Export growth, Trade policy, China |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002196&r=pbe |
| By: | Gajwani, Kiran; Zhang, Xiaobo |
| Abstract: | Using data from 144 village-level governments in India's Tamil Nadu state, this paper investigates political reservations for women and whether the gender of village government leaders influences the provision of village public goods. A knowledge test of village government presidents and a survey about the interaction between village presidents and higher-level officials reveal that female village government presidents have much lower knowledge of the village government system than do their male counterparts and have significantly less contact with higher-level government officials. Although male and female presidents provide similar amounts of some public goods, there is strong evidence that village governments led by a woman built fewer schools and roads—two public goods that require relatively more contact and coordination with higher-level officials. |
| Keywords: | Population Policies,Gender and Health,Agricultural Knowledge and Information Systems,Gender and Law,Rural Development Knowledge&Information Systems |
| Date: | 2014–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6854&r=pbe |
| By: | Maurya, Nagendra Kumar |
| Abstract: | Serious deterioration in government fiscal finances in the late 1990s and early 2000s asked for prudent fiscal management. The fiscal deterioration of 1990s and 2000s led to elevated levels of debt liabilities at both the national and sub-national level. Uttar Pradesh (UP) fiscal position during 1990s and 2000s was one of the most vulnerable. Fiscal and revenue deficit and debt levels were appallingly high creating unmanageable pressure on fiscal finances. The UP government has enacted its FRBMA in 2004 with the aim to arrest rising deficits and debt which mandated reduction in deficit and debt levels within a limit in a given time frame. The sustainability analysis has been made in the current study to capture the effect of reforms on debt position and to assess sustainability of debts in pre and post FRBMA years. Our analysis suggests improvement in all debt and deficit indicators in post 2004-05 years. Debt analysis also confirms sustainable fiscal health (τ = -4.533; p |
| Keywords: | Debt Sustainability, Sub-national Government, State Finances, FRBM Act, Uttar Pradesh |
| JEL: | H0 H63 H72 |
| Date: | 2014–05–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55692&r=pbe |
| By: | Sung Y. Park; Guochang Zhao |
| Abstract: | In this paper the U.S. gasoline demand from 1976 to 2008 is estimated using a time-varying cointegrating regression. We find that price elasticity increased rapidly during the late 1970s and then decreased until 1987. After a relatively small-scaled "increase-decrease" cycle from 1987 to 2000, the price elasticity rose again after 2000. The time-varying change of the elasticities may be explained by the proportion of gasoline consumption to income and fluctuation of the degree of necessity. The result of the error correction model shows that a deviation from a long-run equilibrium is corrected quickly, and the welfare analysis illustrates there may be a gain by shifting the tax scheme from income tax to gasoline tax. |
| Keywords: | Gasoline demand; Time-varying coefficient; Cointegration; Canonical coin-tegration regression; Error-correction model; deadweight loss. |
| JEL: | C51 Q41 H71 |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002107&r=pbe |
| By: | José Miguel Martín Rodríguez |
| Abstract: | As we know, the European Union has faced the challenge of harmonization in the tax field with varied results. We may think that the advanced harmonization in indirect taxes (custom duties, VAT and excise duties) has reduced the distortions that they may create in the intra-EU commerce. Far from this assumption, in the paper we will underline how the lack of a complete harmonization may create competitive advantages in certain countries and sectors. Specifically, we will examine how the road haulage sector is affected by the differences in diesel excise duties among Member States. The proposal for a Euro-Mediterranean Free-Trade Area would face the same problems as the European Union. If there are distortions inside the European Union, the extension of the free trade area to other mediterranean countries would possibly worsen it. This is why we suggest the establishment of a system equivalent to the IFTA (International Fuel Tax Agreement), existing in the United States and Canada, in order to achieve an efficient haulage system free of tax distortions. |
| Keywords: | excise duties, diesel, fuel tourism, IFTA, tax harmonization |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:uae:sermed:35&r=pbe |
| By: | XiaoBo Zhang; Ravi KANBUR |
| Abstract: | While increasing income inequality in China has been commented on and studied extensively, relatively little analysis is available on inequality in other dimensions of human development. Using data from different sources, this paper presents some basic facts on the evolution of spatial inequalities in education and healthcare in China over the long run. In the era of economic reforms, as the foundations of education and healthcare provision have changed, so has the distribution of illiteracy and infant mortality. Across provinces and within provinces, between rural and urban areas and within rural and urban areas, social inequalities have increased substantially since the reforms began. D 2005 Elsevier Inc. All rights reserved. JEL classification: D63; O15; O18 |
| Keywords: | Illiteracy; Infant mortality rate; Spatial inequality in China; Polarization |
| Date: | 2013–10–14 |
| URL: | http://d.repec.org/n?u=RePEc:wyi:journl:002079&r=pbe |
| By: | Francesco Saraceno (OFCE) |
| Abstract: | This brief argues that increasing inequality had deep macroeconomic consequences as it contributed, in combination with credit institutions, to either stagnating aggregate demand or to increasing public and private debt. Inequality may also contribute, along with supply factors, to the drifting towards secular stagnation. Income distribution would then be one of the major determinants of the increasing global imbalances that made the world economy extremely fragile at the outset of the crisis. The crisis in turn exacerbated inequality, especially in peripheral Eurozone countries. The path towards sustainable future growth passes therefore for a reduction of inequality that, in particular in European countries, needs to be coordinated. Finally, if rent-seeking plays an important role in the past increase of inequality, then active fiscal policies and regulation need to be part of the effort to curb inequality. |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/12hs8nng048qsb118kcsacukij&r=pbe |
| By: | Lorenzo Burlon (Bank of Italy) |
| Abstract: | In this paper we study why the misallocation of resources across different productive sectors tends to persist over time. To this end we propose a general equilibrium model that delivers two structural relations. On the one hand, the public expenditure distribution influences the future sectoral composition of the economy; on the other, the distribution of vested interests across sectors determines public policy decisions. The model predicts that different initial sectoral compositions entail different future streams of public expenditure and therefore different development paths. |
| Keywords: | public expenditure, sectoral composition, vested interests, economic growth |
| JEL: | O41 O43 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_961_14&r=pbe |
| By: | Yuichiro Matsumoto (Graduate School of Economics, Osaka University) |
| Abstract: | This paper shows that in a borrowing-constrained economy, a median level of inequality stimulates investment, whereas low and high levels of inequality dampen investment. This nonlinearity is a result of two effects. There are more rich individuals in an equal economy than in an unequal economy. Therefore, more individuals can invest. However, in an equal economy, rich individuals have less wealth than they would in an unequal economy, which can dampen investment. My paper shows that these two effects produce nonlinearity if investment is indivisible. |
| Keywords: | Economic development; Indivisible investment; Misallocation of capital |
| JEL: | O11 O16 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1419&r=pbe |