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on Public Economics |
| By: | Kemal Cebeci (Public Finance, Marmara University, Faculty of Economics, Istanbul, Turkey,) |
| Abstract: | Capital taxes have an important place in the tax policy due to its role on economic growth and other effects. Capital taxes derived from different economic sources or parties such as: income of households, income of corporations, income of self-employed, stock of capital. In EU, related with the goals of the tax policy which can be explained as: equity-efficiency, capital taxation can be varied in different countries. For EU transition economies, economic growth may become preferential goal of the tax policy related with the relatively low level of GDP in contrast with EU15. So, EU transition economies may apply tax policy in favor of capital. In this study, we investigated our assumption: capital can be taxed at a lower level in EU11 economies compared to EU15 countries for encouraging capital†. Tax statistics of Eurostat on capital taxation for several indicators were used for the period of 2008-2018. Our statistical analysis and findings partially show that capital is taxed relatively low in EU transition economies and tax burden on capital has decreased more than EU15 in the period of 2008-2018. |
| Keywords: | Capital taxation, transition economies, tax policy, growth. |
| JEL: | H20 H21 H30 O40 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:aly:journl:202076&r=all |
| By: | David R. Agrawal (University of Kentucky, Martin School of Public Policy & CESifo); Dirk Foremny (Universitat de Barcelona & IEB & CESifo); Clara Martínez-Toledano (Columbia Business School) |
| Abstract: | This paper analyzes the effect of wealth taxation on mobility and the consequences for tax revenue and wealth inequality. We exploit the unique decentralization of the Spanish wealth tax system in 2011—after which all regions levied positive tax rates except for Madrid—using linked administrative wealth and income tax records. We find that five years after the reform, the stock of wealthy individuals in the region of Madrid increases by 10% relative to other regions, while smaller tax differentials between other regions do not matter for mobility. We rationalize our findings with a theoretical model of evasion and migration, which suggests that evasion is the mechanism most consistent with all of the mobility response being driven by the paraíso fiscal. Combining new subnational wealth inequality series with our estimated elasticities, we show that Madrid’s status as a tax haven reduces the effectiveness of raising tax revenue and exacerbates regional wealth inequalities. |
| Keywords: | Wealth Taxes, Mobility, Inequality, Enforcement, Fiscal Decentralization, Tax Havens, Evasion |
| JEL: | E21 H24 H31 H73 J61 R23 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2020-15&r=all |
| By: | John Gallemore (University of Chicago - Booth School of Business); Stephan Hollander (Tilburg University - School of Economics and Management); Martin Jacob (WHU - Otto Beisheim School of Management) |
| Abstract: | We use U.S. Securities and Exchange Commission (SEC) filings to provide initial large-sample evidence regarding utilization of corporate tax provisions by U.S. firms under the Coronavirus Aid, Relief, and Economic Security Act (CARES). These tax provisions were intended to provide firms immediate liquidity to prevent widespread bankruptcies and layoffs in response to the COVID-19 pandemic. However, critics have argued that the provisions were poorly targeted and amounted to “giveaways†for shareholders of large corporations. We find that 38 percent of firms discuss at least one of the CARES tax provisions in their SEC filings, a result primarily attributable to the net operating loss (NOL) carryback provision. Firms experiencing lower stock returns during the COVID-19 outbreak are more likely to discuss CARES tax provisions, but not firms in states or industry sectors exhibiting large increases in unemployment. Further, we find a higher likelihood of tax provision discussions for firms with pre-pandemic losses and higher financial leverage. Finally, we document some evidence that firms facing potential reputational or political costs from discussing these tax provisions may have avoided doing so. Our analyses suggest that tax provisions under CARES were not material for most publicly-traded U.S. firms, were not likelier to benefit firms in greater need of liquidity during the pandemic, and that some firms perceived that disclosing benefits would be costly. These findings are important for policymakers as they consider additional economic relief for U.S. corporations while the coronavirus pandemic lingers. |
| Keywords: | Tax policy, net operating loss, payroll tax, economic stimulus, COVID-19, pandemics, disclosure, political costs |
| JEL: | H12 H25 H51 H84 I18 M41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-81&r=all |
| By: | Stefano Boscolo |
| Abstract: | This paper deals with the erosion of the personal income tax (PIT) base, a wellknown phenomenon that is undermining the redistributive features of the Italian tax system. Several sources of income previously subject to progressive marginal tax rates are now taxed under substitute proportional tax regimes or are entirely exempt from taxation. The existing tax system as of the 2019 tax year is compared with three alternative policy scenarios. First, a comprehensive income tax scheme where all income components are included in the PIT base is examined. Second, a flatrate personal income tax scheme with a drastic reduction in revenue is considered. Third, a further flat-rate tax scheme with a neutral effect on revenue is simulated. The focus of the comparison is on the unequal tax treatment of close equals. Decomposition approaches to the study of classical horizontal inequity are applied and discussed (van de Ven et al., 2001; Duclos et al., 2003; Urban and Lambert, 2008). The findings show that the erosion of the PIT base has increased the level of horizontal inequity of the tax system only negligibly, and that limited benefits would be obtained if a flat personal income tax were to be adopted. |
| Keywords: | classical horizontal inequity; comprehensive income tax; flat tax; redistribution; microsimulation; IT-EXEMPT |
| JEL: | D31 H23 H24 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:mod:dembwp:0176&r=all |
| By: | Takuya Obara; Yoshitomo Ogawa |
| Abstract: | This study examines the optimal tax structure in an endogenous fertility model with non- cooperative couples. In the model, both child quality and quantity are suboptimal due to the non-cooperative behavior of couples. Moreover, we consider the external effects of children on society and center-based childcare services. In such a unified model, we characterize the formulae for optimal income tax rates, child tax/subsidy rates, and tax/subsidy rates on center-based childcare services. We find that income taxation, not child subsidy, corrects the suboptimal low fertility level caused by the non-cooperative behavior of couples. Child tax tends to be optimal as the required tax revenue becomes higher or the degree of external effects of children on society becomes smaller. Specifically, under the availability of lump-sum taxes and absence of externality of children on society, child tax is desirable to alleviate the deadweight loss from income taxation. Moreover, we explore the condition under which a child subsidy is needed. The subsidy for external childcare services corrects the external effects of children on society, not the non-cooperative behavior of couples. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:tcr:wpaper:e157&r=all |
| By: | Agnès Bénassy-Quéré (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Hippolyte d'Albis (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We revisit the standard theoretical model of tax competition to consider imperfect mobility of both capital and labor. We show that the mobility of one factor affects the taxation of both factors, and that the "race-to-the-bottom" narrative (with burden shifting) applies essentially to capital-exporting countries. We validate our predictions using a panel of 29 OECD countries over the period 1997-2017. The quantitative contribution of rising capital mobility to the decline of corporate income tax rates over our sample period is nonetheless less than that of population ageing. |
| Keywords: | Imperfect factor mobility,Globalization,Tax competition |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03134050&r=all |
| By: | Berliant, Marcus; Gouveia, Miguel |
| Abstract: | The literatures dealing with voting, optimal income taxation, implementation, and pure public goods are integrated here to address the problem of voting over income taxes and public goods. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realizations of the abilities of consumers drawn from a known distribution, but must meet the realization-dependent budget. Even though the space of alternatives is infinite dimensional, conditions on primitives are found to assure existence of a majority rule equilibrium when agents vote over both a public good and income taxes to finance it. |
| Keywords: | Voting; Income taxation; Public good |
| JEL: | D72 D82 H21 H41 |
| Date: | 2021–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:106138&r=all |
| By: | Aroop Chatterjee (WITS - University of the Witwatersrand [Johannesburg]); Léo Czajka (UCL - Université Catholique de Louvain); Amory Gethin (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab) |
| Abstract: | This paper considers the feasibility of implementing a progressive wealth tax to collect additional government revenue to both reinforce fiscal sustainability in the wake of the COVID-19 crisis and reduce persistent extreme inequality in South Africa. Drawing on our new companion paper, we first identify the tax base and discuss the design of potential tax schedules. Testing alternative tax schedules, we estimate how much additional revenue could be collected from a progressive tax on the top 1% richest South Africans. Our results show that under conservative assumptions, a wealth tax could raise between 70 and 160 billion Rands—1.5% to 3.5% of the South African GDP.We discuss in turn how sensitive our estimates are to assumptions on (1) mismeasurement of wealth and (2) tax avoidance and evasion, based on the most recent tax policy literature. We examine technical issues related to the enforcement of the tax, and how third-party reporting and pre-filled declarations could be used to optimize measurement of taxable wealth and minimize evasion and avoidance opportunities. Finally, we explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wilwps:halshs-03131182&r=all |
| By: | Yunmin Chen; YiLi Chien; Yi Wen; C. C. Yang |
| Abstract: | We adopt an analytically tractable Aiyagari-type model to study the distinctive roles of unconditional lump-sum transfers and public debt in reducing consumption inequality due to uninsurable income risk. We show that in the absence of wealth inequality, using lump-sum transfers is not an optimal policy for reducing consumption inequality---because the Ramsey planner opts to rely solely on public debt to mitigate income risk without the need for lump-sum transfers. This result is surprising in light of the popularity of universal basic income advocated by many politicians and scholars. |
| Keywords: | Lump-sum Transfers; Universal Basic Income; Ramsey Problem; Public Liquidity; Incomplete Markets; Heterogeneous-Agents |
| JEL: | C61 E22 E62 H21 H30 |
| Date: | 2021–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:89824&r=all |
| By: | Itai Sher |
| Abstract: | This paper concerns Saez and Stantcheva's (2016) generalized social marginal welfare weights (GSMWW), which are used to aggregate losses and gains due to the tax system, while incorporating non-utilitarian ethical considerations. That approach evaluates local changes in tax policy without appealing to a global social objective. However, I argue that local comparisons between different tax systems implicitly entail global comparisons. Moreover, whenever welfare weights are not of a utilitarian kind, these implied global comparisons are inconsistent. Part of the motivation for the GSMWW approach is that it provides a way to incorporate broader ethical judgements into the evaluation of the tax system while preserving the Pareto principle. I suggest that the problems with the approach ought to spark a reconsideration of Pareto if one wants to represent broader values in formal policy analysis. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2102.07702&r=all |
| By: | Antonio Acconcia (CESF - Center for Studies in Economics and Finance - Università degli studi di Napoli Federico II); Marcello d'Amato (CESF - Center for Studies in Economics and Finance - Università degli studi di Napoli Federico II); Riccardo Martina (CESF - Center for Studies in Economics and Finance - Università degli studi di Napoli Federico II); Marisa Ratto (LEDa - Laboratoire d'Economie de Dauphine - CNRS - Centre National de la Recherche Scientifique - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres) |
| Abstract: | The unification of Italy in 1861 determined that all institutions of the pre-unitary states were replaced by those of the new-born Kingdom of Italy, thus implying common rules for agents formerly obeying to different ones. Moreover, a major tax reform was also set in that determined differential increments of the tax burden across provinces. We investigate the potential implications of these events for tax compliance. By comparing a province-level measure of tax evasion just after the reform with a corresponding recent one, we show a strong process of convergence in compliance. Non-negligible spatial differences in tax evasion, however, still persist nowadays. Further empirical evidence suggests that such differences can be at least in part traced back to the tax reform. |
| Keywords: | tax shock,noncompliance,State formation,decentralized enforcement |
| Date: | 2021–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03132761&r=all |
| By: | Amílcar Marcelo Varela Enríquez (Universidad Central del Ecuador / Instituto de Altos Estudios Nacionales, Av. Universitaria, Quito 170129 Ecuador); Gustavo Adrián Salazar Espinoza (Universidad Central del Ecuador, Av. Universitaria, Quito 170129 Ecuador) |
| Abstract: | The objective of this research is to determine the relationship between fiscal decentralization and economic growth for Latin America from a heterodox perspective based on the research question, what is the relationship between fiscal decentralization and economic growth? For this, the evidence and the empirical works, as well as the methodologies used, which are contrasted to determine their viability are widely discussed. The methodology used is an ordinary least squares model based on balanced panel data to correct possible errors, that is, a panel data specification model that measures the fixed and random effects that combine appropriate interest variables with variables of interest, control to avoid bias of mutual causality. The tests applied for the selection of the most appropriate estimators determine that the null hypothesis is accepted that a greater fiscal decentralization affects economic growth, in which the public investment of the Latin American countries from the application of decentralization, it has allowed its impact on per capita GDP to be stronger. Finally, the null hypothesis is accepted and there is no structural change in the slopes of the model in the public investment variable. So, it is not necessary to create dummy variables to pick up the change in the public investment coefficient. |
| Keywords: | Fiscal decentralization, economic growth, panel data, GDP per capita, public investment |
| JEL: | O43 H77 C33 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:aly:journl:202062&r=all |
| By: | András Simonovits (ELKH KRTK KTI and BUT MI, Budapest, Hungary) |
| Abstract: | Typically economists arguing for flexible (or variable) retirement age, but they rely on steady state analysis. In this paper we consider the replacement of a mandatory retirement system with a flexible one in real time. We show that even if early retirement is duly punished, diminishing the effective retirement age by 1 year raises the first year's and the total expenditures during transition by 8% and 70% of the original annual expenditure, respectively. |
| Keywords: | retirement age, flexible retirement age, variable retirement age, transition cost |
| JEL: | H11 H55 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:has:discpr:2109&r=all |
| By: | Grégoire Rota-Graziosi (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Rabah Azerki; Islam Asif |
| Abstract: | This paper explores the interplay between top wealth and policies namely regulation and taxation exploiting variation in exposure to international commodity prices. Using a global panel dataset of billionaire's net worth, results point to a positive relationship between commodity prices and the concentration of wealth at the top. Regulation especially pertaining to competition is found to limit the effects of commodity price shocks on top wealth concentration while taxation has little effect. Moreover, commodity price shocks crowd out non-resource tax revenue hence limiting the scope for income transfers and redistribution. Results are consistent with the primacy of ex ante interventions over ex post ones to address top wealth inequality. |
| Keywords: | Inequality,Wealth concentration,Competition,Tax,Natural resources,Development |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03129746&r=all |
| By: | Giles, John T. (World Bank); Meng, Xin (Australian National University); Xue, Sen (Jinan University); Zhao, Guochang (Southwest University of Finance and Economics, Chengdu) |
| Abstract: | This paper uses a randomized information intervention to shed light on whether poor understanding of social insurance, both the process of enrolling and costs and benefits, drives the relatively low rates of participation in urban health insurance and pension programs among China's rural-urban migrants. Among workers without a contract, the information intervention has a strong positive effect on participation in health insurance and, among younger age groups, in pension programs. Migrants are responsive to price: in cities where the premia are low relative to earnings, information induces health insurance participation, while declines are observed in cities with high relative premia. |
| Keywords: | migration, social insurance, information, randomised controlled trial |
| JEL: | H53 H55 J46 J61 O15 O17 O53 P35 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14093&r=all |