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on Public Economics |
| By: | Sarah Perret; Diana Hourani; Bethany Millar-Powell; Antonia Ramm |
| Abstract: | This working paper presents novel analysis comparing in a consistent way the tax treatment of labour and capital income across OECD countries, through stylised effective tax rates (ETRs). It shows that dividend income and capital gains are generally subject to lower ETRs than wage income at the personal level. In many countries, capital income is also tax-favoured even when considering taxes paid by both firms and individuals, although the gap between labour and capital income taxation tends to be smaller than when considering only personal-level taxes. The gap between ETRs on labour and capital income varies between countries and grows with income levels in some. The paper highlights that differential tax treatment of labour and capital income can affect the efficiency and equity of tax systems. |
| Keywords: | capital, high earners, inequality, labour, progressivity |
| JEL: | H2 |
| Date: | 2023–08–28 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ctpaaa:65-en&r=pbe |
| By: | Casi, Elisa (Dept. of Business and Management Science, Norwegian School of Economics); Mardan, Mohammed (Dept. of Business and Management Science, Norwegian School of Economics); Stage, Barbara M. B. (WHU - Otto Beisheim School of Management) |
| Abstract: | In recent decades, increased mobility of capital and labor improved individuals’ opportunities to avoid or evade tax. This chapter explores two programs commonly provided by tax havens that facilitate individuals in dodging taxation in their home country. We first focus on longer-existing initiatives targeting wealthy individuals by offering citizenship and residence-by-investment (CBI/RBI) programs and discuss how they allow individuals to evade taxes. We then delve into the recently launched digital nomad visa (DNV) programs, which grant individuals temporary residence in a country while working exclusively remotely. We provide a comprehensive overview of the key features of existing programs based on a novel, hand-collected dataset. Currently, more than 40 countries offer a DNV program, and half of them are tax havens. Although DNV programs mainly create concerns about tax avoidance, they can also provide tax evasion opportunities similar to those documented in the literature for CBI and RBI programs. |
| Keywords: | Digital Nomadism; Citizenship- and Residence by-investment Programs; Digital Nomad Visa; Tax Residency; Tax Havens; Offshore Tax Avoidance and Evasion |
| JEL: | F42 G21 H26 |
| Date: | 2023–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2023_012&r=pbe |
| By: | Kane Borders (EU Tax - EU Tax Observatory); Sofía Balladares (EU Tax - EU Tax Observatory); Mona Barake (EU Tax - EU Tax Observatory); Enea Baselgia (EU Tax - EU Tax Observatory) |
| Abstract: | Digital Service Taxes (DSTs) are a recently introduced fiscal tool designed to tax digital companies. This note collects all publicly available data to take stock of the first few years of DST implementation. Currently, twelve countries – both OECD and non-OECD – have an active DST in place. Current tax revenues from these DSTs are mostly in line with expected revenues, comparable in magnitude to estimated Pillar 1 revenues, and rising rapidly. First experiences (e.g., from the UK) suggest that DSTs can be effective at taxing digital companies that have tended to pay low corporate income tax rates in destination countries in a targeted way. However, the available data remains limited and more research needs to be done to progress towards a full cost-benefit analysis of DSTs. |
| Date: | 2023–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-04174657&r=pbe |
| By: | Daniel Reck; Arthur Seibold |
| Abstract: | Empirical evidence suggests that individuals often evaluate options relative to a reference point, especially seeking to avoid losses. We undertake the first welfare analysis under reference-dependent preferences. We characterize the welfare impact of changes in reference points and prices, decomposing these into direct and behavioral effects. The sign of direct and behavioral effects depends on the form of reference-dependent payoffs; which of these effects matter for welfare depends on whether reference dependence reflects a bias or a normative preference. We derive sufficient statistics formulas quantifying the social welfare effects of changes in reference points and prices in terms of estimable reduced-form parameters and normative judgments. We illustrate these findings with an empirical application to reference dependence exhibited in German workers’ retirement decisions. We find positive social welfare effects of increasing the Normal Retirement Age, but ambiguous effects of financial incentives to postpone retirement. |
| Keywords: | reference-dependent preferences, loss aversion, welfare, pension reform |
| JEL: | D91 D60 H55 J26 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2023_450&r=pbe |
| By: | Mujahid, Junaid |
| Abstract: | The Impact of Taxation on Circular Economy: Exploring how tax policies influence the adoption and success of circular economy practices, fostering sustainable resource use and reducing waste generation |
| Date: | 2023–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:uejr4&r=pbe |
| By: | Kilanko, Victor |
| Abstract: | Tax Reforms to Promote Circular Economy in the USA: Assessing potential tax reforms that could boost circular economy adoption in the United States, fostering sustainable practices across industries |
| Date: | 2023–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:tx3dq&r=pbe |
| By: | Mujahid, Junaid |
| Abstract: | Case Study USA: Taxation and Circular Economy Initiatives: Analyzing the implementation and effectiveness of tax policies supporting circular economy practices in the United States, with a focus on their economic and environmental impacts |
| Date: | 2023–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:npcrh&r=pbe |
| By: | Crampes, Claude; Ladoux, Norbert; Lozachmeur, Jean-Marie |
| Abstract: | We analyze a Pareto optimal income tax problem à la Mirrlees (1971) in which households consume three types of goods: energy goods, energy efficient investments and non-energy goods. The two main ingredients of our normative analysis are: i) an indirect relationship between energy and the satisfaction of energy needs, as energy-efficient investments transform energy into services such as light, heating, and air conditioning; and, ii) imperfect information of the policy designer as regards the level of energy efficiency of households’ housing and their labor market productivity. Each household differs with respect to these two latter characteristics, and the government designs a non-linear income tax combined with energy and energy efficient investment non linear pricing that maximizes a weighted sum of households’ utilities. We show that a benevolent social planner should distort energy prices in a way that depends on the difference between the saturation of energy needs and the complementarity between energy and the level of energy efficiency in the provision of energy services. A sufficient condition for energy consumption to be subsidized is that the rebound effect is small. Second, when individuals can invest in energy efficiency on top of energy consumption, these investments should always be subsidized and the marginal subsidy should always be higher than the one on energy consumption. |
| JEL: | H21 I38 Q48 |
| Date: | 2023–08–24 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:128384&r=pbe |
| By: | Henrik Kleven; Claus Thustrup Kreiner; Kristian Larsen; Jakob Egholt Søgaard |
| Abstract: | A key contention in economics is the discrepancy between micro and macro elasticities of labor supply with respect to marginal tax rates. We revisit this question, focusing on the role of dynamic returns to effort among top earners. We develop a new model of earnings responses to taxes in the presence of dynamic returns. In this model, the returns to effort are delayed and mediated by job switches such as promotions within firms or movements between firms. Short-run micro elasticities are attenuated relative to the true long-run macro elasticity. We proceed by providing two main empirical analyses using rich administrative data from Denmark. The first part presents descriptive evidence on earnings and hours-worked patterns over the lifecycle that confirm the predictions of the theoretical model. The second part presents quasi-experimental evidence on earnings responses to taxes using discrete job switches. The empirical strategy is informed by the theoretical model, according to which job switches can be used to (partially) identify the macro elasticity of labor supply. The evidence shows that, at the top of the distribution, macro elasticities are much larger than micro elasticities due to dynamic compensation effects. |
| JEL: | C1 D6 E6 H2 H3 J2 J3 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31549&r=pbe |
| By: | Stéphane Gauthier (Institute for Fiscal Studies); Fanny Henriet (Paris School of Economics) |
| Date: | 2023–08–14 |
| URL: | http://d.repec.org/n?u=RePEc:ifs:ifsewp:23/22&r=pbe |