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on Public Economics |
| By: | Alexander Leodolter; Aleksander Rutkowski |
| Abstract: | Mortgage interest tax relief contributes to the favourable tax treatment of owner-occupied housing com-pared to other investments. It thereby creates market distortions and may at the same time often not give rise to its intended effect, namely to increase homeownership. EU country-specific recommendations have asked for a reduction of the relief in Member States, also in view of risks to macroeconomic stability. The paper analyses the effects of removing mortgage interest tax relief on public revenue and expenditure, household disposable income and income inequality in 14 EU Member States with the microsimulation model EUROMOD. It finds that the tax relief largely benefits households at medium to high income levels. Consequently, its removal could help decrease income inequality in almost all Member States. |
| Keywords: | The Fiscal and Distributional Effects of Removing Mortgage Interest Tax Relief in EU Member States, Leodolter, Rutkowski, mortgage interest tax relief, mortgage interest tax deductibility, immovable property, housing, taxation, owner-occupied housing, homeownership tax bias, EUROMOD, simulation, inequality. |
| JEL: | D1 D14 D3 D31 H2 H21 H22 H23 H24 H31 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecobri:072&r=pbe |
| By: | Philipp Harms (Johannes Gutenberg University Mainz); Jana Niedringhaus (Johannes Gutenberg University Mainz) |
| Abstract: | In this paper, we argue that the recent erosion of the societal consensus in many democratic countries reflects a mix of economic and non-economic forces, which potentially reinforce each other. We present a simple model of a society that consists of different income groups, and in which the government uses redistributive taxation to maximize its political support. Under social cohesion, all citizens identify with the society at large, setting aside their own non-economic priorities and ambitions in the interest of the common good. We analyze the consequences of an exogenous identification shock, which induces high-income earners to no longer identify with the society at large. This shock forces the government to reconsider its tax policy and other citizens to reconsider their identification choices. We establish conditions that must be satisfied to prevent such a society from dropping into a state of social disintegration – i.e. a situation in which neither high-income earners nor low-income earners identify with the society – and highlight the parameters that determine the likelihood of such an outcome. Tentative empirical evidence supports the model's main hypotheses. |
| Keywords: | Social Identity, Redistribution, Social Conflict |
| JEL: | D72 D74 D91 H23 Z13 |
| Date: | 2024–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:jgu:wpaper:2401&r=pbe |
| By: | Tuuli Paukkeri (VATT Institute for Economic Research and Finnish Centre of Excellence in Tax Systems Research (FIT)); Terhi Ravaska (Tampere University, VATT Institute for Economic Research, Finnish Centre of Excellence in Tax Systems Research (FIT) and CESifo) |
| Abstract: | We study whether disability insurance (DI) recipients increase their labour supply after the introduction of an automatic reinstatement policy, i.e. a programme mitigating the risk of losing eligibility for DI benefits due to a trial period of substantially increased work. We use Finnish administrative data and identify the effect of the policy on partial DI recipients by using partial DI applicants whose application was rejected as a control group. Partial DI recipients by definition have substantial remaining work capacity and are therefore potentially more responsive to programmes affecting work incentives than full DI benefit recipients. The rejected individuals have similar work histories, health impairments and remaining work capacity to those who are allowed benefits, enabling us to estimate the effects of automatic reinstatement on labour supply with a credible control group. Based on our estimation results, automatic reinstatement of benefits increases annual earnings modestly, but for those with mental disorders the effect is larger. |
| Keywords: | disability insurance, labour supply, automatic reinstatement |
| JEL: | J14 H55 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:fit:wpaper:20&r=pbe |
| By: | Klinges, Giulia (University of Liège); Jousten, Alain (University of Liège); Lefèbvre, Mathieu (Aix Marseille School of Economics) |
| Abstract: | Over the years, the Belgian social security system has undergone substantial reform with a prime focus on increasing older worker labor force participation. The paper explores the effect of past reforms on inequality in old age. We distinguish two separate effects: The mechanical effect considers the change in inequality and expected benefit levels due to the reforms for a fixed retirement age distribution. The behavioral effect accounts for the endogenous change caused by changes in the incentives to work. Our results show that mechanically, reforms have led to losses in expected benefits for all but the lowest income quintile. Behavioral changes had a positive but orders of magnitude smaller effect. Overall, inequality decreased as a result of reforms. |
| Keywords: | social security and public pensions, old-age labor supply, retirement, pension reforms, inequality |
| JEL: | D63 H55 I38 J26 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16735&r=pbe |
| By: | Patricia Alejandro; Mary Ellen Carter; Denise DiPasquale; Edward Ludwig Glaeser; Adam M. Guren; Paul S. Willen |
| Abstract: | Boston’s high housing costs reflect a historic failure to build enough units to satisfy demand. Interest rates and construction costs have risen recently, and the flow of new market-rate residential housing projects has slowed. To spur more construction, the City of Boston is considering various policy options. Our committee was asked by Boston Mayor Michelle Wu to assess the market impacts of one of these options: real estate tax abatements. This report presents our analysis of the likely effects on the number of units constructed and the costs to taxpayers of various tax abatement alternatives.We do not recommend which policy, if any, the city should pursue; Boston officials are better positioned to assess whether the benefits of these policies warrant the costs to taxpayers. |
| Keywords: | tax abatement; housing supply; Boston |
| JEL: | H2 H71 R31 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:97647&r=pbe |
| By: | Drystan Phillips; Teresa Ghilarducci (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | Challenging the widespread assumption that people claim their retirement benefits only when they retire, more than one-fifth of older workers in the United States start claiming Social Security benefits as soon as they are eligible, even while working for pay. Low-income older workers are more than three times as likely as high-income workers to claim early, indicating a reliance on Social Security payments to supplement low wages. Those who claim before the full retirement age (also known as the Normal Retirement Age) will receive reduced benefits throughout their lives, leaving them financially vulnerable once they stop working. Because so many older workers collect reduced Social Security benefits, raising the retirement age will have little effect on getting people to work longer and will simply reduce benefits further. Instead, reforms should focus on policies like creating an Older Workers Bureau to support work at older ages, and bolstering Social Security benefits for those who risk falling into poverty in retirement. |
| Keywords: | Social Security, Workers, Jobs, Older workers, retirement, retirement savings, retirement age |
| JEL: | E24 I14 J62 J38 E21 J83 J32 |
| Date: | 2023–07 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2023-03&r=pbe |
| By: | Adel Ben Youssef (UCA - Université Côte d'Azur); Mounir Dahmani (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, UGAF - Université de Gafsa - Sidi Ahmed Zarroug) |
| Abstract: | This study examines the dynamic relationships between digitalization, environmental tax revenues, and energy resource capacity within the framework of the Environmental Kuznets Curve (EKC), focusing on their combined impact on environmental quality. It employs a cross-sectional augmented autoregressive distributed lag (CS-ARDL) approach, an advanced technique for complex panel data that is specifically designed to address issues of cross-sectional dependence and slope heterogeneity inherent in panel data analysis. The research covers 88 countries, including both low- and middle-income countries (LMICs) and high-income countries (HICs), to understand how digitalization, as a driving force of the Fourth Industrial Revolution, interacts with environmental taxation and energy resource management to affect greenhouse gas emissions. The results reveal distinct effects of environmental taxes and energy capacity on environmental quality, with marked differences between LMICs and HICs. In HICs, technological progress, especially in information and communication technology (ICT), is found to contribute significantly to environmental quality. For LMICs, the effects are less evident, and the findings suggest the need for tailored strategies in environmental policy and energy management. By providing empirical evidence on the differential impacts of digitalization and energy policies in different economic contexts, this research enriches the environmental economics discourse. It highlights the need for policy frameworks tailored to specific contexts that effectively balance economic growth with sustainable development goals, thereby providing insightful implications for achieving the Sustainable Development Goals (SDGs). |
| Keywords: | ICT, environmental taxes, energy resource capacity, environmental sustainability, developing countries, developed countries, CS-ARDL, DCCEMG, AMG |
| Date: | 2024–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04374125&r=pbe |
| By: | Michael Keen (UTokyo - The University of Tokyo) |
| Abstract: | This book is a lightly revised version of a report prepared for the Ministry of Foreign Affairs, France, under the platform Mobilisation des Ressources Intérieures Publiques (MRIP). It provides an overview of core issues in thinking about and advising on tax-based approaches to environmental problems in developing countries. The aim is to bring a rigorous and practicable public finance perspective to the environmental challenges faced by developing countries, with a focus on those over which they have some control. Special attention is paid to nineteen ‘priority countries, ' mainly Francophone and all but one in sub-Sharan Africa. The hope and intent, of course, is that the discussion and analysis have wider application and interest beyond these countries. |
| Abstract: | Cet ouvrage est une version légèrement révisée d'un rapport préparé pour le ministère français de l'Europe et des Affaires étrangères, dans le cadre de la plateforme Mobilisation des Ressources Intérieures Publiques (MRIP). Il fournit une revue des principales questions relatives à la fiscalité environnementale des pays en développement. L'objectif est d'apporter un point de vue pratique et rigoureux des finances publiques pour répondre aux défis environnementaux auxquels sont confrontés les pays en développement. Une attention particulière est accordée à dix-neuf «pays prioritaires», principalement francophones et tous situés en Afrique subsaharienne sauf un. L'espoir et l'intention, bien sûr, sont que la discussion et l'analyse aient une application et un intérêt plus larges au-delà de ces pays. |
| Keywords: | Taxation, Environment, Developing countries, fiscalité, environnement, Pays en développement |
| Date: | 2023–12–21 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04380458&r=pbe |
| By: | Teresa Ghilarducci (Schwartz Center for Economic Policy Analysis (SCEPA)) |
| Abstract: | The Social Security benefit structure penalizes people who claim before age 70. Yet over one-fifth of eligible people claim before their full retirement age (age 67 for those born in 1960), and over 90 percent claim before the maximum age of 70, resulting in reduced monthly benefits. While many claim early out of necessity, financial advisors often recommend to those with retirement savings to spend down their savings before tapping into Social Security to increase their lifetime monthly benefit. However, few people have professional advisors. A Social Security Bridge option that is formalized, accessible, and easy to understand would allow beneficiaries to boost monthly benefits and help protect against downward mobility in retirement. This bridge, while important for many, is not a relevant for those with little to no retirement savings. Thus, we also advocate for increasing the Social Security minimum benefit to ensure adequate lifetime retirement income for the over 63 million Americans who will retire without any retirement savings. |
| Keywords: | Social Security, Workers, Jobs, Older workers, retirement, retirement savings, retirement age |
| JEL: | E24 I14 J62 J38 E21 J83 J32 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:epa:cepapn:2023-04&r=pbe |