nep-pbe New Economics Papers
on Public Economics
Issue of 2022‒10‒03
nine papers chosen by
Thomas Andrén

  1. The tax system of OECD countries and main recommendations from the Organisation: Parameters for a tax reform in Brazil By Pedro Humberto Bruno de Carvalho Junior
  2. What Cadastral Tax Rate Should Be Imposed on Farm Assets By Podstawka, Marian
  3. Distributional Effects of Public Spending and Tax Shocks in Middle-Income Countries: A Panel VAR Approach By Abdulaleem Isiaka; Alexander Mihailov; Giovanni Razzi
  4. Optimal Assignment of Bureaucrats: Evidence from Randomly Assigned Tax Collectors in the DRC By Augustin Bergeron; Pedro Bessone; John Kabeya Kabeya; Gabriel Z. Tourek; Jonathan L. Weigel
  5. A nation-wide experiment: fuel tax cuts and almost free public transport for three months in Germany -- Report 3 Second wave results By Allister Loder; Fabienne Cantner; Andrea Cadavid; Markus B. Siewert; Stefan Wurster; Sebastian Goerg; Klaus Bogenberger
  6. Markups, Taxes, and Rising Inequality By Stéphane Auray; Aurélien Eyquem; Bertrand Garbinti; Jonathan Goupille-Lebret
  7. Tourist choice, competitive tourism markets and the effect of a tourist tax on producers revenues By Asensi Descals-Tormo; Jose Ramon Ruiz-Tamarit
  8. Race and Redistribution in the United States: An Experimental Analysis By Jesper Akesson; Robert W. Hahn; Robert D. Metcalfe; Itzhak Rasooly
  9. Social protection expansions during crisis and fiscal space: From ad hoc to durable solutions? By Annalena Oppel

  1. By: Pedro Humberto Bruno de Carvalho Junior (IPC-IG)
    Keywords: tax reform; OECD; Brazil
    Date: 2022–09
  2. By: Podstawka, Marian
    Abstract: The aim of the study was to determine cadastral tax rate calculated on farm assets, which would allow for replacing the current wealth taxes without increasing the tax burden for farms. The research was based on data from FADN (Farm Accountancy Data Network) farms. The method of financial analysis simulation was used. The research shows that the total wealth tax burden related to farm income is small. The taxes are the greatest burden to the income of very small farms whose economic size is between EUR 2,000 and 8,000 annually (7.37%) and farms dealing with field crops (4.36%). Meanwhile, farms dealing with horticulture (0.69%) and poultry production (0.54%), as well as large farms with an annual economic size of EUR 100,000–500,000 (1.93%) and very large farms with an economic size of more than EUR 500,000 (1.13%) currently pay relatively lower taxes. It was also found that significant changes occurred in the structure of farm assets. While in the 1970s the largest share (approx. 84%) of the assets of individual farms at that time concerned buildings, currently the share of buildings in assets decreased to approx. 19%. There is a relatively larger share of buildings in assets among farms specialized in horticulture and poultry amounting to 43.2 and 37.8%, respectively. The research allowed for determining the rate of a possible cadastral tax, while maintaining the current tax burden for farms. The tax rate may not exceed 0.22%. Relating it to the value of buildings, permanent crops, and land, it will not increase the current tax burden for farms.
    Keywords: Agricultural Finance, Financial Economics
    Date: 2022–06–28
  3. By: Abdulaleem Isiaka (Department of Economics, University of Reading); Alexander Mihailov (Department of Economics, University of Reading); Giovanni Razzi (Department of Economics, University of Reading)
    Abstract: This paper is the first to employ the GMM Panel VAR approach in examining the distributional effects of public spending and tax shocks over different horizons in middle-income countries. The study also investigates the response of income distribution variables to shocks imposed on three key components of social expenditures: social protection, health expenditures and education spending. We find that: (i) shocks to government and education spending tend to exhibit the most pronounced distributional consequences; (ii) shocks to both these expenditures positively impact the low- and middle-income groups, with high-income groups benefiting from education spending shocks as well; (iii) social protection shocks often exhibit brief equalizing effects, while (iv) health spending and tax shocks generally have no apparent effects on the economic divide; (v) social protection and health spending shocks largely elevate the income share of the wealthy, whereas tax shocks generally do not benefit the income groups under study. Further inference from variance decompositions confirms that fiscal policy variables are crucial drivers of the income distribution. Our results are robust to alternative measures of inequality, different orderings of variables, the inclusion of inflation, the exclusion of countries with relatively lower level of inequality, as well as those with high level of inequality. As a final contribution, our study examines how the results for middle-income countries compare with high-income ones. We find that while the same fiscal policies could have different distributional effects across the middle- and high-income groups, we also reveal that the results for both groups often agree on some general trends. Interestingly, the equalizing impacts of health spending and tax shocks are witnessed only in high-income countries.
    Keywords: distributional effects, public spending shocks, tax shocks, middle-income countries, income inequality, GMM Panel VAR
    JEL: E62 H53 O15
    Date: 2022–09–13
  4. By: Augustin Bergeron; Pedro Bessone; John Kabeya Kabeya; Gabriel Z. Tourek; Jonathan L. Weigel
    Abstract: The assignment of workers to tasks and teams is a key margin of firm productivity and a potential source of state effectiveness. This paper investigates whether a low-capacity state can increase its tax revenue by optimally assigning its tax collectors. We study the two-stage random assignment of property tax collectors into teams and to neighborhoods in a large Congolese city. The optimal assignment involves positive assortative matching on both dimensions: high (low) ability collectors should be paired together, and high (low) ability teams should be paired with high (low) payment propensity households. Positive assortative matching stems from complementarities in collector-to-collector and collector-to-household match types. We provide evidence that these complementarities reflect in part high-ability collectors exerting greater effort when matched with other high-ability collectors. According to our estimates, implementing the optimal assignment would increase tax compliance by 2.94 percentage points and revenue by 26% relative to the status quo (random) assignment. Alternative policies, such as replacing low-ability collectors with new ones of average ability or increasing collectors’ performance wages, are likely incapable of achieving a similar revenue increase.
    JEL: D73 H11 H20 M50
    Date: 2022–09
  5. By: Allister Loder; Fabienne Cantner; Andrea Cadavid; Markus B. Siewert; Stefan Wurster; Sebastian Goerg; Klaus Bogenberger
    Abstract: In spring 2022, the German federal government agreed on a set of measures that aimed at reducing households' financial burden resulting from a recent price increase, especially in energy and mobility. These measures included among others, a nation-wide public transport ticket for 9\ EUR per month and a fuel tax cut that reduced fuel prices by more than 15\,\%. In transportation research this is an almost unprecedented behavioral experiment. It allows to study not only behavioral responses in mode choice and induced demand but also to assess the effectiveness of transport policy instruments. We observe this natural experiment with a three-wave survey and an app-based travel diary on a sample of hundreds of participants as well as an analysis of traffic counts. In this third report, we provide first findings from the second survey, conducted during the experiment.
    Date: 2022–08
  6. By: Stéphane Auray (CREST-ENSAI, Bruz, France); Aurélien Eyquem (University of Lausanne, Switzerland); Bertrand Garbinti (CREST-ENSAE-Institut Polytechnique Paris, France); Jonathan Goupille-Lebret (Univ Lyon, CNRS Ecully and ENS de Lyon, France)
    Abstract: How to explain rising income and wealth inequality? We build an original heterogeneousagent model with three key features: (i) an explicit link between firm’s market power and top income shares, (ii) a granular representation of the tax and transfer system, and (iii) three assets with endogenous portfolio decisions. Using France as an illustration, we look at how changes in markups, taxes, factor productivity, and asset prices affect inequality dynamics over the 1984-2018 period. Rising markups account for the bulk of rising income inequality. Wealth inequality dynamics result mostly from changes in saving rate inequality but only in response to the exogenous changes in taxation and markups. Our results point to the critical importance of endogenous saving decisions in response to exogenous shocks as a key driver of wealth inequality.
    Keywords: Heterogeneous Agents, Taxes, Market Power, Income Inequality, Wealth Inequality.
    JEL: D4 E2 H2 O4 O52
    Date: 2022–09–19
  7. By: Asensi Descals-Tormo (Department of Applied Economics, Universitat de València (Spain)); Jose Ramon Ruiz-Tamarit (Department of Economic Analysis, Universitat de València (Spain) & IRES/LIDAM, UCLouvain)
    Abstract: We propose a model for the tourism sector assuming basically two markets, one for tourist services and the other for accommodation. These sub-markets are considered as separate but interrelated. The nature of the feedback is determined by a vertical complementarity between tourist services and lodging. We obtain the optimal solution of the tourist choice problem, the primary demand for tourist services and the derived demand for overnight stays. Then, we focus on the equilibrium outcomes assuming perfectly competitive tourism markets. We don’t address the externalities caused by tourism activities. Consequently, we move away from efficiency by introducing a tax on overnight stays and inspecting the consequences for the competitiveness and for producers’ revenues in each market. The answer key elements are, apart from reservation prices, the direct and cross price elasticities of demand for tourist services. The study of structural parameters extends and completes our analysis of tourism.
    Keywords: Complementarity, Elasticity, Preferences, Tax, Tourism
    JEL: D11 H2 Z3
    Date: 2022–07–27
  8. By: Jesper Akesson; Robert W. Hahn; Robert D. Metcalfe; Itzhak Rasooly
    Abstract: Scholars have suggested that White American support for welfare is related to beliefs about the racial composition of welfare recipients. While a host of observational studies lend credence to this view, it has not yet been tested using the tools of randomized inference. In this study, we do this by conducting two incentive-compatible experiments (n = 9,775) in which different participants are randomly given different signals about the share of welfare recipients who identify as Black and White. Our analysis yields four main findings. First, 86% of respondents greatly overestimate the share of welfare recipients who are Black, with the average respondent overestimating this by almost a factor of two. Second, White support for welfare is inversely related to the proportion of welfare recipients who are Black—a causal claim that we establish using treatment assignment as an instrument for beliefs about the racial composition of welfare recipients. Third, just making White participants think about the racial composition of welfare recipients reduces their support for welfare. Fourth, providing White respondents with accurate information about the racial composition of welfare recipients (relative to not receiving any information) does not significantly influence their support for welfare.
    JEL: C93 D90 H0
    Date: 2022–09
  9. By: Annalena Oppel
    Abstract: This study provides a first attempt to contribute a large-scale assessment of whether crisis response as observed during the COVID-19 pandemic can serve as a feasible blueprint for creating durable solutions across countries. Adopting a lens on fiscal contracts, it assesses high-level parameters of both the collection and the spending sides of public finance. More precisely, it contrasts fiscal and political feasibility by considering fiscal capacity, policy portfolios, and existing inequality levels.
    Keywords: Social protection, Tax revenue, COVID-19, Pandemic, Crisis, Fiscal contractualism
    Date: 2022

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