nep-pbe New Economics Papers
on Public Economics
Issue of 2023‒08‒14
eleven papers chosen by
Thomas Andrén

  1. Global Taxation and National Welfare States By Priyaranjan Jha; Rahul Mukherjee
  2. Size, heterogeneity and distributional effects of self-employment income tax evasion in Italy By Martina Bazzoli; Paolo Di Caro; Franceso Figari; Carlo V. Fiorio; Marco Manzo
  3. Taxing Cryptocurrencies By Ms. Katherine Baer; Ruud A. de Mooij; Mr. Shafik Hebous; Mr. Michael Keen
  4. Unpleasant Surprises? Elections and Tax News Shocks By Mr. Antonio David; Can Sever
  5. Can Leviathan City Governments Use Tax Policy to Attract the Creative Class? By Batabyal, Amitrajeet; Beladi, Hamid
  6. Who's on (the 1040) First? Determinants and Consequences of Spouses' Name Order on Joint Returns By Emily Y. Lin; Joel Slemrod; Evelyn A. Smith; Alexander Yuskavage
  7. Evaluation of the sugar-sweetened beverage tax in Oakland, United States, 2015-2019: A quasi-experimental and cost-effectiveness study. By White, Justin S; Basu, Sanjay; Kaplan, Scott; Madsen, Kristine A; Villas-Boas, Sofia B; Schillinger, Dean
  8. The Labor Market Effects of Disability Benefit Loss By Anikó Bíró; Cecília Hornok; Judit Krekó; Dániel Prinz; Ágota Scharle
  9. Unemployment benefit reforms to support employment and inclusiveness in the United States: Impacts of the Pandemic Unemployment Assistance By Eliza-Jane Pearsall; Daniele Pacifico; Edoardo Magalini
  10. Local Option Sales Taxes, Metropolitan Planning Organizations, and SB 375: A Question of Priorities By Barbour, Elisa; Thoron, Noah
  11. Certification and Recertification in Welfare Programs: What Happens When Automation Goes Wrong? By Wu, Derek; Meyer, Bruce D.

  1. By: Priyaranjan Jha; Rahul Mukherjee
    Abstract: This paper studies the effects of globalization on the ability of governments to generate tax revenues for the financing of national welfare states. In this context, it summarizes the theoretical predictions of various economic models of tax competition between countries and discusses the role of factor mobility and country-specific characteristics such as size and factor abundance. It then draws on existing empirical evidence to outline the effects of globalization on capital, labor and consumption taxes. It touches on recent trends in income tax incentives for highly skilled workers, the challenges related to digital platforms, and ends with a discussion of recent attempts at international tax coordination among countries, including the OECD BEPS initiative.
    Keywords: globalization, welfare state, tax competition, corporate taxation, income taxation, global tax coordination
    JEL: F21 F22 F23 F62 F68 H11 H21 H25 H71 J61
    Date: 2023
  2. By: Martina Bazzoli (Irvapp); Paolo Di Caro (Ministry of Economy and Finance of Italy); Franceso Figari (Bocconi University); Carlo V. Fiorio (University of Milan); Marco Manzo (Ministry of Economy and Finance of Italy)
    Abstract: We measure tax evasion in Italy by estimating a food expenditure equation that disentangles households with prevalent income from self-employment, which is self-declared, from those with mostly third-party reported income. By using a novel dataset that links the 2013 Italian Household Budget Survey with individual tax records over a period of 7 years, we reduce measurement error by a great extent. We also depart from the usual constant share of underreporting, showing that underreporting heterogeneity among self-employed is significant, and is larger for singles and for college-educated households. We show that self-employed workers in Italy exhibit a similar attitude to tax evasion as those in other developed countries. Therefore, we point to the structure of the economy for an explanation of why aggregate tax evasion in Italy is larger than in other developed countries. The estimated heterogeneity of underreporting behavior of households combined with the use of a tax-benefit microsimulation model have allowed us to shed light on the distributional effects of income tax evasion, showing that almost 73% of the missing revenue is attributable to tax-payers at the top of the income distribution.
    Keywords: ASSENTE
    Date: 2022–10
  3. By: Ms. Katherine Baer; Ruud A. de Mooij; Mr. Shafik Hebous; Mr. Michael Keen
    Abstract: Policymakers are struggling to accommodate cryptocurrencies within tax systems not designed to handle them; this paper reviews the issues that arise. The greatest challenges are for implementation: crypto’s quasi-anonymity is an inherent obstacle to third-party reporting. Design problems arise from cryptocurrencies’ dual nature as investment assets and means of payment: more straightforward is a compelling case for corrective taxation of carbon-intensive mining. Ownership is highly concentrated at the top, but many crypto investors have only moderate incomes. The capital gains tax revenue at stake worldwide may be in the tens of billions of dollars, but the more profound risks may ultimately be for VAT/sales taxes.
    Keywords: Cryptocurrency; virtual assets; tax evasion; tax compliance; Bitcoin
    Date: 2023–07–05
  4. By: Mr. Antonio David; Can Sever
    Abstract: Unanticipated changes in tax policy are likely to have different macroeconomic effects compared to anticipated changes due to several mechanisms, including fiscal foresight and policy uncertainty. It is therefore important to understand what drives such policy surprises. We explore the nature of unanticipated tax policy changes by focusing on a political economy determinant of those events, namely the timing of elections. Using monthly data for 22 advanced economies and emerging markets over the period 1990-2018, we show that implementation lags tend to be significantly longer for tax policy change announcements that are made during the pre-election periods, thereby leading to a lower likelihood of “tax news shocks”. We also find that implementation lags become much shorter for tax policy changes that are announced in the aftermath of elections, generating more frequent tax news shocks. This pattern remains similar for different tax measures or types of taxes. The findings are robust to a number of checks, including alternative definitions of tax news shocks, or to controlling for various economic and institutional factors.
    Keywords: Tax Shocks; Electoral Cycles; Political Economy
    Date: 2023–06–30
  5. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We focus on an aggregate economy of two nearby cities A and B and study whether it is possible for the leviathan governments in these two cities to use taxes τ^A and τ^B to attract members of the so-called creative class. The creative class population is fixed and members locate either in city A or B depending on the utility from such location. In this setting, we accomplish five tasks. First, given the two taxes, we determine the value of a metric ζ that describes how the creative class population partitions into cities A and B. Second, for a given partition of the creative class population, we state the budget constraints confronting the governments in cities A and B. Third, we state and solve the decision problems of the two governments when they act as independent leviathans and maximize tax revenue. Fourth, we ascertain the efficient taxes that maximize the sum of tax revenues in the aggregate economy. Finally, we discuss the implications of our analysis for tax policy.
    Keywords: Creative Class, Leviathan City Government, Tax Policy, Tax Revenue
    JEL: H20 R11 R50
    Date: 2023–01–09
  6. By: Emily Y. Lin; Joel Slemrod; Evelyn A. Smith; Alexander Yuskavage
    Abstract: Married couples filing a joint return put the male name first 88.1% of the time in tax year 2020, down from 97.3% in 1996. The man’s name is more likely to go first the larger is the fraction of the couple’s allocable income that goes to him, and the older is the couple. Based on state averages, putting the man’s name first is strongly associated with conservative political attitudes, religiosity, and a survey-based measure of sexist attitudes. Risk-taking and tax noncompliance are both associated with the man’s name going first.
    JEL: H20
    Date: 2023–06
  7. By: White, Justin S; Basu, Sanjay; Kaplan, Scott; Madsen, Kristine A; Villas-Boas, Sofia B; Schillinger, Dean
    Abstract: Background While a 2021 federal commission recommended that the United States government levy a sugar-sweetened beverage (SSB) tax to improve diabetes prevention and control efforts, evidence is limited regarding the longer-term impacts of SSB taxes on SSB purchases, health outcomes, costs, and cost-effectiveness. This study estimates the impact and cost-effectiveness of an SSB tax levied in Oakland, California. Methods and findings An SSB tax ($0.01/oz) was implemented on July 1, 2017, in Oakland. The main sample of sales data included 11, 627 beverage products, 316 stores, and 172, 985, 767 product-store-month observations. The main analysis, a longitudinal quasi-experimental difference-in-differences approach, compared changes in beverage purchases at stores in Oakland versus Richmond, California (a nontaxed comparator in the same market area) before and 30 months after tax implementation (through December 31, 2019). Additional estimates used synthetic control methods with comparator stores in Los Angeles, California. Estimates were inputted into a closed-cohort microsimulation model to estimate quality-adjusted life years (QALYs) and societal costs (in Oakland) from 6 SSB-associated disease outcomes. In the main analysis, SSB purchases declined by 26.8% (95% CI -39.0 to -14.7, p < 0.001) in Oakland after tax implementation, compared with Richmond. There were no detectable changes in purchases of untaxed beverages or sweet snacks or purchases in border areas surrounding cities. In the synthetic control analysis, declines in SSB purchases were similar to the main analysis (-22.4%, 95% CI -41.7% to -3.0%, p = 0.04). The estimated changes in SSB purchases, when translated into declines in consumption, would be expected to accrue QALYs (94 per 10, 000 residents) and significant societal cost savings (>$100, 000 per 10, 000 residents) over 10 years, with greater gains over a lifetime horizon. Study limitations include a lack of SSB consumption data and use of sales data primarily from chain stores. Conclusions An SSB tax levied in Oakland was associated with a substantial decline in volume of SSBs purchased, an association that was sustained more than 2 years after tax implementation. Our study suggests that SSB taxes are effective policy instruments for improving health and generating significant cost savings for society.
    Keywords: Humans, Commerce, Beverages, Cost-Benefit Analysis, Taxes, Consumer Behavior, Sugar-Sweetened Beverages, Cost Effectiveness Research, Prevention, Clinical Research, Good Health and Well Being, Medical and Health Sciences, General & Internal Medicine
    Date: 2023–04–01
  8. By: Anikó Bíró (Centre for Economic and Regional Studies); Cecília Hornok (KIEL Institute for the World Economy); Judit Krekó (Centre for Economic and Regional Studies, Budapest Institute for Policy Analysis); Dániel Prinz (World Bank); Ágota Scharle (Budapest Institute for Policy Analysis)
    Abstract: Disability benefits are costly and tend to reduce labor supply. While costs can be reduced by careful targeting, correcting past eligibility rules or assessment procedures may entail welfare costs. We study a major reform in Hungary that reassessed the health and working capacity of a large share of beneficiaries. Leveraging age and health cutoffs in the reassessment, we estimate employment responses to loss or reduction of benefits. We find that among those who left disability insurance due to the reform, 57% were employed in the primary labor market and 38% had neither employment nor benefit income. The consequences of leaving disability insurance sharply differed by pre-reform employment status. 62% of those without pre-reform employment did not work after exiting disability insurance, whereas this ratio was only 14% for those who had some employment in the pre-reform year. The gains of the reform in activating beneficiaries were small and strongly driven by pre-reform employment status. This points to the importance of combining financial incentives with broader labor market programs that increase employability.
    Keywords: Keywords: disability benefit, reactivation, employment policy
    JEL: H53 H55 J08 J14
    Date: 2023–06
  9. By: Eliza-Jane Pearsall; Daniele Pacifico; Edoardo Magalini
    Abstract: This paper analyses the impact of Pandemic Unemployment Assistance (PUA) extensions on jobseeker households in selected US states and examines how these extensions compare to the pre-pandemic policies. The analysis finds that PUA extensions increase benefit duration for all jobseekers, but due to interactions between other government benefits, this translates to significant increases in benefit generosity only for jobseekers without children. This has an impact on the financial incentives to take up employment, although incentives are still above the OECD average. PUA extensions have little impact for people who have been unemployed for a very long time, and jobseekers with no recent contribution history. PUA extensions also have minimal impact on jobless families with children who continue to receive less support compared to other OECD countries.
    JEL: C63 I38 J65 H55
    Date: 2023–07–25
  10. By: Barbour, Elisa; Thoron, Noah
    Abstract: This report considers the role of local option sales taxes (LOSTs) for transportation in influencing spending patterns in regional transportation plans adopted by Metropolitan Planning Organizations (MPOs) in California’s four largest metropolitan regions. Through quantitative analysis of information on LOST measures placed on the ballot from 1976 to 2022, and through case studies of recent LOSTs placed on the ballot in two counties, patterns in LOST expenditure by mode and purpose are compared over time and across regions, and with spending allocated by MPOs in their long-range regional transportation plans. View the NCST Project Webpage
    Keywords: Law, Social and Behavioral Sciences, Local Option Sales Taxes (LOSTs), county sales tax measures for transportation, Metropolitan Planning Organizations (MPOs), Senate Bill 375, transportation funding and finance in California
    Date: 2023–07–01
  11. By: Wu, Derek (University of Virginia); Meyer, Bruce D. (University of Chicago)
    Abstract: How do administrative burdens influence enrollment in different welfare programs? Who is screened out at a given stage? This paper studies the impacts of increased administrative burdens associated with the automation of welfare caseworker assistance, leveraging a unique natural experiment in Indiana in which the IBM Corporation remotely processed applications for two-thirds of all counties. Using linked administrative records covering nearly 3 million program recipients, the results show that SNAP, TANF, and Medicaid enrollments fell by 15%, 24%, and 4% one year after automation, with these heterogeneous declines largely attributable to cross-program differences in recertification costs. Earlier-treated and higher-poverty counties experienced larger declines in welfare receipt. More needy individuals were screened out at exit while less needy individuals were screened out at entry, a novel distinction that would be missed by typical measures of targeting which focus on average changes overall. The decline in Medicaid enrollment exhibited considerable permanence after IBM's automated system was disbanded, suggesting potential long-term consequences of increased administrative burdens.
    Keywords: welfare programs, automation, take-up, targeting, administrative burdens
    JEL: H53 I38
    Date: 2023–07

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