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on Public Economics |
| By: | Dyck, Daniel |
| Abstract: | This study investigates how strategic interactions between corporate tax planning and tax enforcement are affected by two policy instruments: strengthening tax enforcement by increasing the number of specialized enforcement staff and improving tax audit technologies. I employ an economic model with a board of director's investment in a Tax Control Framework (TCF) and a tax manager's tax planning effort jointly shaping corporate tax planning and a tax auditor's technology-based audit decision. I show that the board only invests in the TCF when the enforcement environment is sufficiently strict, because it trades-off the costs and benefits of tax planning. Since strengthening tax enforcement decreases tax planning effort, the result can be less investment in a TCF in a strict enforcement environment, implying that TCF investment and enforcement can be strategic substitutes. Strikingly, I identify conditions under which improvements in tax audit technology increase corporate tax planning and impair tax audit efficiency, due to a crowding out of audit incentives. This result contradicts the view that improving audit technologies is universally effective, particularly in tax authorities with adequate staffing. |
| Keywords: | tax control framework, tax planning, tax risk management, tax audit technology, tax enforcement |
| JEL: | H26 H32 M42 M48 C70 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:314430 |
| By: | Muhammad Khudadad Chattha; Jürgen René Blum; Roy Kelly |
| Keywords: | Macroeconomics and Economic Growth-Taxation & Subsidies |
| Date: | 2023–03 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:39554 |
| By: | Henrik Kleven (Princeton University); Claus Kreiner (Department of Economics, University of Copenhagen); Kristian Larsen (Department of Economics, University of Copenhagen); Jacob Soegaard (Department of Economics, University of Copenhagen) |
| Abstract: | We investigate long-run earnings responses to taxes in the presence of dynamic returns to effort. First, we develop a theoretical model of earnings determination with dynamic returns to effort. In this model, earnings responses are delayed and mediated by job switches. Second, using administrative data from Denmark, we verify our models predictions about earnings and hours-worked patterns over the lifecycle. Third, we provide a quasi-experimental analysis of long-run earnings elasticities. Informed by our model, the empirical strategy exploits variation among job switchers. We find that the long-run elasticity is around 0.5, considerably larger than the short-run elasticity of roughly 0.2. |
| Keywords: | Labor supply, tax distortions |
| JEL: | H21 J22 |
| Date: | 2025–03–17 |
| URL: | https://d.repec.org/n?u=RePEc:kud:kucebi:2503 |
| By: | Minamo MIKOSHIBA |
| Abstract: | This study assesses the welfare implications of Japan’s public long-term care insurance (LTCI) system, focusing on the significance of a universal insurance system with in-kind benefits, in a rich overlapping generations model characterized by two-sided altruism. The welfare effects of the LTCI reform are influenced by caregiver labor productivity and generosity of the means-tested welfare program. When caregiver productivity is low, universal LTCI offering cash benefits can improve welfare more effectively than a system with in-kind benefits, despite the positive impact of the in-kind policy on caregiver labor supply. Cash benefits can maintain positive welfare effects while simultaneously reducing government spending on LTCI. Eliminating universal LTCI transfers the burden of care to families and increases reliance on welfare programs, partially offsetting reductions in government expenditure. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25030 |
| By: | Mario Mansour; Marijn Verhoeven; Fayçal Sawadogo; Benedict Chu Sheen Tan |
| Abstract: | This note presents the methodology behind the IMF’s World Revenue Longitudinal Database, a comprehensive data set that tracks government revenue trends since the early 1990s. With data for 193 countries, including 190 IMF member countries, the World Revenue Longitudinal Database provides policymakers, researchers, and the public with invaluable insights into the evolution of the level and composition of revenues and tax revenues. It is a unique, consistent, and reliable source for comparing countries around the world, helping to shape policies that support the Sustainable Development Goals, climate action, and economic equity. Updated annually, the database and accompanying technical note provide a concise overview of recent revenue developments, data revisions, and methodological improvements, making it an essential resource for understanding revenue mobilization developments at the global level. |
| Keywords: | World Revenue Longitudinal Database; tax revenues; nontax revenues; tax potential |
| Date: | 2025–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imftnm:2025/004 |
| By: | Rod Tyers (University of Western Australia Business School, Perth, Australia) |
| Abstract: | Motivation is offered for the scenario in which a large country imposing a general tariff, notwithstanding gains toward fiscal balance, suffers a contraction in output and employment, with output and net welfare effects that depend on monetary policy and are generally larger than the associated undergraduate dead-weight efficiency losses. A global model is then used to simulate the effects of such a tariff, demonstrating that, while trading partners would be hurt by the tariff, the US economy would also suffer a contraction. The size of the net welfare effects is shown to depend importantly on targets of monetary policy and their associated inflation rates. Nonetheless, the tariff effects are also shown to be dwarfed by those of a proposed business tax break, which redirects investment to the US and would yield larger domestic gains and foreign punitive losses. |
| Keywords: | tariffs, tax breaks, monetary policy |
| JEL: | F3 E5 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:uwa:wpaper:25-02 |
| By: | Toshiyuki Uemura (School of Economics, Kwansei Gakuin University) |
| Abstract: | This study analyzes the market structure of the "Hometown Tax Donation (Furusato Nozei) Market" and the revenue and expenditure structure of local governments, while examining the impact of the Ministry of Internal Affairs and Communications (MIC) regulations. To the best of our knowledge, this study is the first to contribute to these analyses. First, an analysis of the market structure showed that the market share of the top 500 local governments in Japan in terms of donation revenue exceeded 80% of the total. Previously, the market share of the top 100 local governments was over 60% but has since declined. The Herfindahl-Hershman index rose sharply in FY 2018 and declined from FY 2019 onwards, due to the MIC regulations. Spearman's rank correlation coefficients also revealed a fixation of the within-class rankings of donation revenue. Fixation was particularly pronounced for the top-ranked local governments, and fluctuations in rankings among classes decreased following the regulations. Second, according to an analysis of the revenue and expenditure structures of local governments based on an economic behavior model, the composition ratio of revenue and expenditure obtained from the contribution decomposition stabilized after 2019, the year after the regulations were introduced. The correlation coefficients for the donation price and quantity of reciprocal gifts, and for the marginal cost and quantity of reciprocal gifts were both negative, which is consistent with the theoretical results of the economic behavior model. The MIC regulations have had some success in curbing competition for reciprocal gifts by maintaining a certain proportion of the revenue and expenditure of local governments and have prevented the overall monopolization of the market; however, they have also fixed the market structure of the hometown tax donation market. The upper classes are becoming particularly fixed, and local governments in the highest class are engaged in fierce competition over donation prices. |
| Keywords: | Hometown tax donation system, Market structure, Revenue and expenditure structure, Local governments |
| JEL: | H71 H72 H77 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:288 |
| By: | Marion Davin (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier); Mouez Fodha (UP1 - Université Paris 1 Panthéon-Sorbonne, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thomas Seegmuller (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université) |
| Abstract: | This paper examines an endogenous growth model that allows us to consider the dynamics and sustainability of debt, pollution, and growth. Debt evolves according to the financing adaptation and mitigation efforts and to the damages caused by pollution. Three types of features are important for our analysis: the technology through the negative effect of pollution on TFP; the fiscal policy; the initial level of pollution and debt with respect to capital. Indeed, if the initial level of pollution is too high, the economy is relegated to an endogenous tipping zone where pollution perpetually increases relatively to capital. If the effect of pollution on TFP is too strong, the economy cannot converge to a stable and sustainable long-run balanced growth path. If the income tax rates are high enough, we can converge to a stable balanced growth path with low pollution and high debt relative to capital. This sustainable equilibrium can even be characterized by higher growth and welfare. This last result underlines the role that tax policy can play in reconciling debt and environmental sustainability. |
| Keywords: | Environmental damage, pollution, fiscal policy, public debt, sustainability |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:pseptp:hal-04990924 |
| By: | Fabian Bald; Marcel Henkel |
| Abstract: | This paper proposes that spatial policies improve economic outcomes by reducing barriers to supplying labour, with heterogeneous effects across demographic groups. Using quasi-experimental variation in Germany’s fiscal transfer system, we estimate higher employment elasticities for female workers, with the strongest impact in places where public childcare supply is smaller. We propose a quantitative spatial model incorporating location decisions and group-specific frictions to labour force participation. We establish that optimal spatial policy would not unambiguously direct resources to low-wage areas but additionally target regions with high labour supply elasticities, yielding substantial welfare and labour force gains in the aggregate. This paper argues that accounting for differential employment responses significantly alters optimal place-based policy design, highlighting a novel channel for addressing efficiency and equity concerns in ageing economies. |
| Keywords: | Place-Based Policies, Local Public Goods, Labour Force Participation, Fiscal Transfers, Spatial Sorting |
| JEL: | H41 H73 J16 J22 J61 R23 R58 |
| Date: | 2025–03–17 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0063 |
| By: | Becerra Camargo, Oscar Reinaldo (Universidad de los Andes); Cavallo, Eduardo (Inter-American Development Bank); Guzmán Gutiérrez, Carlos Santiago (University of Oxford) |
| Abstract: | This paper investigates the impact of behavioral frictions and information provision on retirement planning through the Dual Advisory program in Colombia. The program gradually became mandatory to prevent costly mistakes and offered personalized information on switching pension plans. Using a regression discontinuity design and administrative data, we estimate the causal effects of the program on switching behavior and contribution patterns. The findings indicate that the program reduced unfavorable switches by approximately 29.5%, due to a combination of deterring would-be switchers for whom the switch would have resulted in lower expected pension (22.7%) and the information received by those who attended the sessions (6.7%). However, the program also deterred favorable switches by 10.7%. There is no evidence of the program affecting contribution frequency post-intervention. |
| Keywords: | Information provision; retirement planning; pensions; switching cost; inertia. |
| JEL: | D14 G53 H55 I22 |
| Date: | 2025–03–27 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021365 |