nep-pbe New Economics Papers
on Public Economics
Issue of 2021‒03‒29
fourteen papers chosen by
Thomas Andrén

  1. Welfare effects of property taxation By Löffler, Max; Siegloch, Sebastian
  2. Estimating Policy-Corrected Long-Term and Short-Term Tax Elasticities for the United States, Germany, and the United Kingdom By Bernd Hayo; Sascha Mierzwa; Umut Unal
  3. Taxation challenges of population ageing: comparative evidence from the European Union, the United States and Japan By Fructuoso Borrallo; Susana Párraga-Rodríguez; Javier J. Pérez
  4. Tax Filing and Take-Up: Experimental Evidence on Tax Preparation Outreach and EITC Participation By Jacob Goldin; Tatiana Homonoff; Rizwan Javaid; Brenda Schafer
  5. Spain’s tax structure in the context of the European Union By David López-Rodríguez; Cristina García Ciria
  6. Removing Welfare Traps: Employment Responses in the Finnish Basic Income Experiment By Verho, Jouko; Hämäläinen, Kari; Kanninen, Ohto
  7. Avoiding Taxes: Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment By Dominika Langenmayr; Lennard Zyska
  8. Beggar-Thy-Neighbour Tax Cuts: Mobility After a Local Income and Wealth Tax Reform in Switzerland By Isabel Martinez
  9. Corporate income tax and wages: A meta-regression analysis By Knaisch, Jonas; Pöschel, Carla
  10. Taxes and Turnout: When the Decisive Voter Stays at Home By Felix Bierbrauer; Aleh Tsyvinski; Nicolas Werquin
  11. Women’s Voice on Redistribution: from Gender Norms to Taxation By Monica Bozzano; Paola Profeta; Riccardo Puglisi; Simona Scabrosetti
  12. What do Italians think about tax evasion? By Giovanni D’Alessio
  13. The tax burden on mobile network operators in Africa By Grégoire Rota-Graziosi; Fayçal Sawadogo
  14. Does Labor Income React more to Income Tax or Means-Tested Benefit Reforms? By Michael Sicsic

  1. By: Löffler, Max; Siegloch, Sebastian
    Abstract: We analyze the welfare implications of property taxation. Using a sufficient statistics approach, we show that the tax incidence depends on how housing prices, labor and other types of incomes as well as public services respond to property tax changes. Empirically, we exploit the German institutional setting with 5,200 municipal tax reforms for identification. We find that higher taxes are fully passed on to rental prices after three years. The pass-through is lower when housing supply is inelastic. Combining reduced form estimates with our theoretical framework, we simulate the welfare effects of property taxes and show that they are regressive.
    Keywords: property taxation,welfare,tax incidence,local labor markets,rental housing
    JEL: H22 H41 H71 R13 R31 R38
    Date: 2021
  2. By: Bernd Hayo (University of Marburg); Sascha Mierzwa (University of Marburg); Umut Unal (University of Marburg)
    Abstract: We estimate the elasticities of the most important tax categories using a new quarterly database of discretionary tax measures for the United States, Germany, and the United Kingdom over the period 1980Q1 to 2018Q2. Employing Romer and Romer’s (2009) narrative approach, we construct a policy-neutral dataset based on revenue figures from governmental records. Using this quantitative information, we are able to subtract policy-induced changes, which are typically not considered in the extant literature. Furthermore, we estimate state-dependent elasticities. Our conclusions are as follows. (i) In Germany and the UK, long-term tax-to-base elasticities are generally higher than short-term elasticities, whereas results for the US are mixed. (ii) Short-term base-to-output elasticities tend to be smaller than unity, whereas long-term elasticities are close to unity. (iii) German and UK tax-to-output elasticities in the short term are lower than long-term elasticities, with mixed results for the US. (iv) For tax-to-base elasticities, we find business cycle asymmetries across countries but not within countries. (v) For base-to-output elasticities, our results suggest few asymmetries across countries and more asymmetries across tax types. (vi) Typically, the above conclusions do not hold for corporate income tax.
    Keywords: Tax revenue; tax base; tax elasticity; business cycle; Germany; United Kingdom; United States
    JEL: E62 H20 H30 E32
    Date: 2021
  3. By: Fructuoso Borrallo (Banco de España); Susana Párraga-Rodríguez (Banco de España); Javier J. Pérez (Banco de España)
    Abstract: Using microdata from the European Union, the United States and Japan, we show that the elderly bear lower effective tax rates than the young. This difference is explained by the income gap and the different generational consumption baskets. However, tax reforms enacted in recent decades have led to an increase in the relative contribution of the elderly to public finances.
    Keywords: population ageing, tax collection, direct taxes, indirect taxes
    JEL: H2 H24 H25 J14
    Date: 2021–01
  4. By: Jacob Goldin; Tatiana Homonoff; Rizwan Javaid; Brenda Schafer
    Abstract: Governments and non-profits devote substantial resources to increasing take-up of the Earned Income Tax Credit (EITC) through educational outreach. We study a different approach: policies that encourage tax filing. In a large field experiment, we find that IRS letters about free tax preparation modestly increased filing, with a large share of the new filers claiming the EITC. The results suggest policies that increase filing can be an effective way to increase take-up of tax-administered social benefits, even policies that do not raise awareness or directly target the benefit in other ways.
    JEL: H24 I38
    Date: 2021–01
  5. By: David López-Rodríguez (Banco de España); Cristina García Ciria (Banco de España)
    Abstract: This document describes the structure of the Spanish fiscal system in comparison with the economies of the European Union. Spain stands out because of its persistently lower weight of tax revenue over GDP related with the EU28 average. This lower tax revenue over GDP is mainly due to indirect taxes (VAT, special and environmental taxes), having Spain systematically one of the lowest implicit tax rates over consumption in the EU28. Regarding labor taxation, its tax revenue over GDP is also lower to the EU28 average, although the weight of social security contributions over GDP is higher, in particular the contributions charged on employees. The later shows the lower fiscal pressure on labor income in personal taxes in Spain. Spain presents larger tax revenues over capital, in particular regarding wealth taxes.
    Keywords: fiscal system, tax structure, taxation in the EU
    JEL: H20 E62 H23 H24 H25
    Date: 2020–05
  6. By: Verho, Jouko; Hämäläinen, Kari; Kanninen, Ohto
    Abstract: This paper provides evidence that replacing minimum unemployment benefits with a basic income of equal size has minor employment effects at best. We examine an experiment in Finland in which 2,000 benefit recipients were randomized to receive a monthly basic income. The experiment lowered participation tax rates by 23pp for full-time employment. Despite the considerable increase in work incentives, days in employment remained statistically unchanged in the first year of the experiment. Moreover, even though all job search requirements were waived, participation in reemployment services remained high.
    Keywords: Employment, Field experiment, Social insurance, Unemployment benefits, Social security, taxation and inequality, Labour markets and education, C93, H55, I38, J65,
    Date: 2021
  7. By: Dominika Langenmayr; Lennard Zyska
    Abstract: With (automatic) exchange of tax information among countries now common, tax evaders have had to find new ways to hide their offshore holdings. One such way are citizenship-by-investment programs, which offer foreigners a new passport for a local investment or a fixed fee. We show analytically that high-income individuals acquire a new citizenship to lower the probability that their tax evasion is detected through information exchange. Using data on cross-border bank deposits, we find that deposits in tax havens increase after a country starts offering a citizenship-by-investment program, providing indirect evidence that tax evaders use these programs.
    Keywords: Citizenship-by-investment programs, tax havens, tax evasion
    JEL: H26 H24 F53 K37
    Date: 2021–03
  8. By: Isabel Martinez (ETH Zurich, Switzerland)
    Abstract: I analyze mobility responses to the unique introduction of regressive local income schedule in the Swiss Canton of Obwalden in 2006, which was aimed at attracting the top 1%. Difference-in-Differences estimations comparing Obwalden to all other cantons confirm that the reform successfully attracted rich taxpayers: by 2016, the share of rich in the canton more than doubled and average income per taxpayer was 16% higher relative to 2005. Using individual tax data and an instrumental variable approach, I find a large elasticity of the stock of rich taxpayers of 1.5–2 with respect to the average net-of-tax rate. The corresponding flow elasticity ranges from 6.5 to 10. However, the reform did not yield any Laffer effects. Finally, I find positive effects on local employment: the number of jobs per 1,000 inhabitants rose by an estimated 2.3% relative to other cantons and compared to 2005. However, these employment effects are likely driven by a simultaneous reduction of the corporate tax rate.
    Keywords: : Mobility; Personal income tax; Local taxes; Tax competition; Regressive income tax
    JEL: H24 H31 H71 H73 R23
    Date: 2021–01
  9. By: Knaisch, Jonas; Pöschel, Carla
    Abstract: In this paper we apply meta-regression analysis to quantitatively review the growing empirical tax incidence literature that indicates a substantial burden of the corporate income tax falling on employees. While most studies report large negative wage elasticities to corporate taxes, our findings suggest that estimates with positive values are published less often than they should. After accounting for publication bias, we estimate an average wage elasticity to corporate taxes of -0.016. Moreover, methodological aspects (data coverage and temporal focus) drive the heterogeneity among estimates. Our consensus estimates suggest a long-term wage elasticity to corporate taxes between -0.105 and -0.141, depending on the underlying CIT burden variable and the type of data used.
    Keywords: Tax incidence,wages,corporate income tax,wage elasticity to taxes,meta-regression analysis
    Date: 2021
  10. By: Felix Bierbrauer (University of Cologne); Aleh Tsyvinski (Yale University); Nicolas Werquin (Toulouse School of Economics)
    Abstract: We develop a model of political competition with endogenous turnout and endogenous platforms. Parties trade off incentivizing their supporters to vote and discouraging the supporters of the competing party from voting. We show that the latter objective is particularly pronounced for a party with an edge in the political race. Thus, an increase in political support for a party may lead to the adoption of policies favoring its opponents so as to asymmetrically demobilize them. We study the implications for the political economy of redistributive taxation. Equilibrium tax policy is typically aligned with the interest of voters who are demobilized.
    Keywords: Political competition, Income Taxation, Turnout
    JEL: D72 D82 H21
    Date: 2021–03
  11. By: Monica Bozzano (Università di Pavia); Paola Profeta (Università Bocconi, Axa Research Lab on Gender Equality, Dondena Centre for Research on Social Dynamics and Public Policies Università Bocconi); Riccardo Puglisi (Università di Pavia); Simona Scabrosetti (Università di Pavia, Dondena Centre for Research on Social Dynamics and Public Policies Università Bocconi)
    Abstract: Gender norms, i.e. the role of men and women in the society, are a fundamental channel through which culture may influence preferences for redistribution and public policies. We consider both cross-country and individual level evidence on this mechanism. We find that in countries that are historically more gender-equal the tax system today is more redistributive. At the individual level, we find that in more gender equal countries gender differences in redistributive preferences are significantly larger. This effect is driven by women becoming systematically more favorable to redistribution, while there are no significant changes for men. Interestingly, there is no gender-based difference in preferences for redistribution among left-leaning citizens, while this difference is significant among moderates in the expected direction: ideologically moderate women are more favorable to redistribution than moderate men, and this effect is even stronger among right-leaning individuals.
    Keywords: gender inequality, comparative public finance, tax mix, institutions, historical origins
    JEL: H10 H20 N30 Z18
    Date: 2021–03
  12. By: Giovanni D’Alessio (Banca d'Italia)
    Abstract: The paper shows the opinions on taxes of Italian citizens based on data gathered in four different national surveys between 1992 and 2013. Through a Principal Component Analysis, the study constructs a synthetic indicator of the propensity to evade, examining its intensity across various social groups and its evolution over time. The results show that the propensity to evade taxes is greater among households whose heads have low levels of education and income, are elderly and are resident in the South. Over time, the propensity to evade taxes has been growing on average, especially in the North, which has reduced the gap compared with the South, and among young people under 30 years old. The paper also shows a link between the propensity for tax evasion and some indicators of actual evasion, such as the use of cash and the under-reporting behaviour in the Survey of Household Income and Wealth (SHIW) conducted by the Bank of Italy, confirming the association between cultural elements and evasion behaviour.
    Keywords: tax evasion, social norms, social capital
    JEL: H26 A13 Z13
    Date: 2021–03
  13. 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); Fayçal Sawadogo (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We estimate the tax burden on the mobile telecommunication sector in twenty-five African countries. This tax burden encompasses not only standard and particular taxes under the control of the Ministry of Finance (MoF), but also fees raised by national telecommunication Regulatory Agency (RA). Given the lack of financial data at the country level, we build a representative mobile network operator, named TELCO, using the GSMA Intelligence database. We compute the Average Effective Tax Rate (AETR) for this firm considering general and special taxes and fees levied only on the telecommunication sector. We develop a web application (, which allows the reader to replicate our analysis or to modify TELCO and tax parameters. The AETR varies significantly across countries, ranging from 33 percent in Ethiopia to 118 percent in Niger. Special taxes and fees represent a large share of the AETR illustrating some taxation by regulation and a potential tax competition (a race to the top) between the MoF and the RA. We compare the AETR of TELCO to this of a representative gold mining plant and a standard firm with similar gross return. The tax burden of the telecommunication sector is higher than this of the mining sector in 15 countries out of the 19 countries for which we have data on the gold mining sector.
    Keywords: Taxation,Telecommunication sector,Project analysis,Developing countries
    Date: 2021–01–22
  14. By: Michael Sicsic (TEPP - Travail, Emploi et Politiques Publiques - CNRS - Centre National de la Recherche Scientifique - UPEM - Université Paris-Est Marne-la-Vallée, CRED - Centre de Recherche en Economie et Droit - UP2 - Université Panthéon-Assas, INSEE)
    Abstract: I provide estimates of the compensated elasticity of labor income with respect to the Marginal Net-of-Tax Rate on the 2006-2015 period for France. I exploit not only income tax reforms but also means-tested benefits reforms. I use semiparametric graphical evidence and a classic 2SLS estimation applied to a rich data set including both financial and sociodemographic variables. I obtain an estimated compensated elasticity around 0.2-0.3 in response to income tax reforms, around 0.1 in response to in-work benefit reforms, while I found no statistically significant response to family allowance reforms. I show that the difference between elasticities contradicts the prediction of the classical labor supply model. One possible explanation is that income tax reforms are more salient and better perceived than benefit reforms. This suggests that benefit reforms may be more efficient in reducing inequalities than income tax reforms due to their lesser behavioral responses. Another contribution is to highlight heterogeneous elasticities depending on income, age, family configuration and education. Results are very robust to a large number of robustness checks, unlike previous studies on the US economy.
    Keywords: elasticity of labor income,income tax,means-tested benefit,marginal tax rate
    Date: 2021–02–24

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