nep-pbe New Economics Papers
on Public Economics
Issue of 2015‒03‒27
eleven papers chosen by
Thomas Andrén

  1. Fraude fiscal / Tax Fraud By Alejandro Esteller-Moré; Ignacio Mauleón; James Alm
  2. Does exchange of information between tax authorities influence multinationals' use of tax havens? By Braun, Julia; Weichenrieder, Alfons J.
  3. Empirical evidence on tax cooperation between sub-central administrations By José María Durán-Cabré; Alejandro Esteller-Moré; Luca Salvadori
  4. Taxation and the User Cost of Capital : An Introduction By Creedy, John; Gemmell, Norman
  5. Who benefits from state corporate tax cuts? A local labour markets approach with heterogeneous firms By Juan Carlos Suárez Serrato; Owen Zidar
  6. As American as Apple Inc.: International tax and ownership nationality By Chris Sanchirico
  7. The joint decision of labour supply and childcare in Italy under costs and availability constraints By Francesco Figari; Edlira Narazani
  8. Evidence on the Responsiveness of Export-Related VAT Evasion to VAT Rates in the EU By Jon Bakija; Ivan Badinski
  9. Membership in the Euro area and fiscal sustainability - Analysis through panel fiscal reaction functions. By Piotr Ciżkowicz; Andrzej Rzońca; Rafał Trzeciakowski
  10. Should We Stay or Should We Go? The economic consequences of leaving the EU By Swati Dhingra; Gianmarco I. P. Ottaviano; Thomas Sampson
  11. Temporary Employment Programs, Consumption Smoothing and Employability By Werner L. Hernani-Limarino

  1. By: Alejandro Esteller-Moré (Universitat de Barcelona & IEB); Ignacio Mauleón (Universidad Rey Juan Carlos); James Alm (Tulane University)
    Date: 2014
  2. By: Braun, Julia; Weichenrieder, Alfons J.
    Abstract: Since the mid-1990s, countries offering tax systems that facilitate international tax avoidance and evasion have been facing growing political pressure to comply with the internationally agreed standards of exchange of tax information. Using data of German investments in tax havens, we find evidence that the conclusion of a bilateral tax information exchange agreement (TIEA) is associated with fewer operations in tax havens and the number of German affiliates has on average decreased by 46% compared to a control group. This suggests that firms invest in tax havens not only for their low tax rates but also for the secrecy they offer.
    Keywords: tax havens,tax information exchange agreements,location decisions,international taxation
    JEL: F21 F23 H87
    Date: 2015
  3. By: José María Durán-Cabré (Universidad de Barcelona & IEB); Alejandro Esteller-Moré (Universidad de Barcelona & IEB); Luca Salvadori (Universidad de Barcelona & IEB, TARC)
    Abstract: The literature on horizontal tax interdependence pays limited attention to interactions in administrative policies, although they can play a large role in determining the amount of tax revenues collected. We investigate the incentives for sub-central tax authority cooperation in a decentralized context, with the aim of identifying the determinants of that cooperation. Our results are congruent with standard theory; in particular, the existence of reciprocity is essential for sharing tax information, but there is sluggishness in this process, which is partly the result of the short-sighted behaviour of tax authorities influenced by budget constraints. Hence, this is good news for the functioning of a decentralized tax administration, as in the medium-long run the gains to be made from sharing tax information are achieved.
    Keywords: Tax information sharing, reciprocity, fiscal federalism
    JEL: H71 H77 H83
    Date: 2015
  4. By: Creedy, John; Gemmell, Norman
    Abstract: The aim of this paper is to provide an introduction to the concept of user cost and its determinants. Particular attention is given to the influence of taxation. The concept of user cost relates to the rental, the rate of return to capital, that arises in a profit maximising situation in which further investment in capital produces no additional profit. This paper sets out in some detail the range of assumptions involved in obtaining alternative expressions for the user cost. The user cost refers to a before-tax capital rental, the rate of return that ensures that the (after-tax) cost of capital is equal to the post-tax returns over its life. Hence, associated with the user cost measure is an effective marginal tax rate. This can differ substantially from the statutory marginal rate applicable to the investor. A related effective average tax rate is also defined.
    Keywords: Taxation, User cost, Tax rates,
    Date: 2015
  5. By: Juan Carlos Suárez Serrato (Duke University); Owen Zidar (The University of Chicago,Booth School of Business)
    Abstract: This paper estimates the incidence of state corporate taxes on the welfare of workers, landowners, and firm owners using variation in state corporate tax rates and apportionment rules. We develop a spatial equilibrium model with imperfectly mobile firms and workers. Firm owners may earn profits and be inframarginal in their location choices due to differences in location-specific productivities. We use the reduced-form effects of tax changes to identify and estimate incidence as well as the structural parameters governing these impacts. In contrast to standard open economy models, firm owners bear roughly 40% of the incidence, while workers and landowners bear 30-35% and 25-30%, respectively.
    JEL: H22 H25 H32 H71 R30 R23 R58 J32 F22 F23
    Date: 2015
  6. By: Chris Sanchirico (University of Pennsylvania)
    Abstract: The ownership nationality of large US multinational companies plays an implicit but important role in the current debate over how such companies should be taxed. This paper identifies that role and investigates what is actually known about where these companies’ shareholders reside.
    Keywords: Ownership nationality, home country bias, home equity bias, home bias, TIC system, CPIS, institutional investment managers, Section 13(f), Investment Company Act, Investment Advisers Act, Forms 13F, N-CSR, N-Q, ADV, PF, 1042-S
    JEL: K34 K22 K33 H24 H22 H25 H87 E62 F2 F3 F36 F4 F42 G23 G24 G28 G38
    Date: 2014
  7. By: Francesco Figari; Edlira Narazani
    Abstract: It is widely recognized that childcare has important pedagogical, economic and social effects on both children and parents. This paper is the first attempt to estimate a joint structural model of labour supply and childcare decision applied to Italy. Such an approach is particularly informative given that it allows one to estimate the changes in family choices under different policy simulation scenarios, evaluating the effects on labour supply and childcare usage and the potential consequences for household income.We analyse how maternal labour supply and childcare usage can be affected by relaxing the existing constraints in terms of childcare availability and costs by considering public, private and informal childcare, with related imputed availability and costs and their interaction with the whole tax-benefit system.Due to the regional differences, costs and effects are highly differentiated among different areas of the country. Results suggest that Italian households might alter their childcare and labour supply decisions substantially if the coverage rate of formal childcare increases, in particular if the increase would correspond to the increase needed to reach the European target in the Southern regions. Overall, increasing child care coverage is estimated to be more effective in enhancing labour incentives than decreasing existing child care costs, at the same budgetary cost. However, the potential effects on the disposable income are larger in the latter scenario because decreasing the childcare costs is beneficial also for women who do not change their labour supply behaviour.
    Keywords: childcare, female labour market participation, labour supply, Italy
    JEL: H53 J13 J22 I38
    Date: 2015–03
  8. By: Jon Bakija (Williams College); Ivan Badinski (The Analysis Group)
    Abstract: In almost all countries that operate a value-added tax (VAT), the VAT “zero-rates†exports, meaning that exporting firms can claim credit for VAT on their inputs, but pay no VAT on sales of exports. This is necessary when the goal is to make the base of the tax domestic consumption. A consequence is that firms can reduce their tax burdens by misreporting some of their sales to domestic consumers as exports. In principle, reported exports from country i to country j should match up with reported imports into country j from country i, except for measurement errors, and costs of insurance and freight that are included in import value but not export value. VAT evasion can be another source of discrepancy which would tend to cause reported exports to exceed reported imports for trade flows in the same direction. We use data on such discrepancies in trade flows between pairs of European Union member countries during 1984 through 2011 to infer whether higher VAT rates are associated with greater over-reporting of exports. A difference-in-differences identification strategy, exploiting the fact that VAT rates changed in different ways over time in different countries, suggests that each percentage point increase in the exporting country’s standard VAT rate increases the discrepancy of exports over imports by about 1.1 percent of exports. For the typical EU-15 country, this implies that at the margin, about 15 percent of the static revenue gain from a VAT rate increase would be lost due to this particular channel for VAT evasion.
    Keywords: value added tax, exports, evasion
    JEL: H2 H26
    Date: 2014–11
  9. By: Piotr Ciżkowicz (Warsaw School of Economics); Andrzej Rzońca (Warsaw School of Economics); Rafał Trzeciakowski (Warsaw School of Economics)
    Abstract: We estimate various panel fiscal reaction functions, including those of main categories of general government revenue and expenditure for 12 Euro area member states over the 1970-2013 period. We find that in the peripheral countries where sovereign bond yields decreased sharply in the years 1996-2007, fiscal stance ceased to respond to sovereign debt accumulation. This was due to lack of sufficient adjustment in government non-investment expenditure and direct taxes. In contrast, in the core member states ,which did not benefit from yields’ convergence related to the Euro area establishment, responsiveness of fiscal stance to sovereign debt increased during 1996-2007. It was achieved mainly through pronounced adjustments in government non-investment expenditure. Our findings are in accordance with predictions of theoretical model by Aguiar et al. (2014) and are robust to various changes in modelling approach.
    Keywords: fiscal reaction function, sovereign bond yields’ convergence, fiscal adjustment composition.
    JEL: C23 E62 F34 H63
    Date: 2015–01
  10. By: Swati Dhingra; Gianmarco I. P. Ottaviano; Thomas Sampson
    Abstract: We analyze the effects of Brexit on the UK economy. The most important economic consequence of Brexit would likely be reduced trade with EU countries. We consider an optimistic scenario with relatively small increases in trade barriers between the UK and the EU and a pessimistic scenario with larger rises. In the optimistic scenario Brexit reduces UK income per capita by 1.1% and in the pessimistic scenario income per capita falls by 3.1%. The effect of Brexit on FDI and migration would impose additional costs on the UK and following Brexit the UK would not benefit from future EU free trade agreements such as the Transatlantic Trade and Investment Partnership currently being negotiated with the United States.
    Keywords: Trade, European Union, welfare, Brexit, #ElectionEconomics, government policy, 2015 general election
    JEL: F13 F17
    Date: 2015–03
  11. By: Werner L. Hernani-Limarino (Fundación ARU)
    Abstract: This document attempts to identify the effects of the most comprehensive temporary employment program implemented in Bolivia, the Plan Nacional de Empleo de Emergencia (PLANE), on per-capita calorie intake and future prospects of employment and wages. Using methods for estimation and inference that assume unconfoundedness, we find that the PANE was successful as a consumption smoothing scheme – it increased per-capita calorie intake in households where at least one member had participated in the program, but did not have any effects neither on post-program probabilities of being employed nor on post-program wages. This evidence suggests that, although public employment programs might be useful as social protection policies in times of recession – they help smooth consumption of poor households with unskilled breadwinners; they are not good alternatives to improve the employability of vulnerable populations.
    Keywords: impact evaluation, labor market, employment programs
    JEL: C21 J2 J6 H5
    Date: 2015–03

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