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on Public Economics |
| By: | Arun Advani; David Burgherr; Andy Summers |
| Abstract: | We study international migration responses of the super-rich to taxes using UK administrative data and a difference-in-differences design. We exploit a reform that removes access to a tax break on foreign income for foreigners based on their number of years in the UK, allowing us to compare individuals with similar incomes and wealth. The reform reduces the net-of-tax rate of affected taxpayers by 19%. Emigration flows increase significantly in response, but only temporarily. Overall, the number of affected super-rich in the UK decreases by 0.26% for a 1% decline in the net-of-tax rate. Those who remain UK-resident increase reported income and income tax by around 50%, driven by foreign income coming into scope of UK tax, rather than investments being onshored. Emigrants induced to leave by the reform pay substantially less tax, but more than half still report non-zero UK income three years after leaving. By contrast, emigrants unaffected by tax changes retain a much smaller economic and fiscal footprint in the UK. |
| Keywords: | taxation, migration, super-rich, capital income, inequality, mobility |
| JEL: | F22 H24 H31 J61 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11870 |
| By: | Panagiotis Asimakopoulos |
| Abstract: | The aim of this paper is to document tax legislation and create a dataset, consisting of 120 laws that brought significant changes in the vast majority of categories of taxes in Greece from 1974 to 2018. We create an exhaustive Tax Law Database consisting of Laws that brought significant changes in the tax system and more importantly covered the vast majority of categories of taxes in Greece from 1974-2018. Our dataset, tax revenue figures, national accounts covered the period up to 2018 excluding Greece exit process from enhance fiscal surveillance, government change after election of 2019 and Covid-19 implications. |
| Keywords: | Taxation policy, structural reforms, fiscal policy. |
| JEL: | E62 E63 |
| Date: | 2025–04–04 |
| URL: | https://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2025_04 |
| By: | Jizhou Wang; Xiaodan Fang; Lei Huang; Yongfeng Huang |
| Abstract: | Economic inequality is a global challenge, intensifying disparities in education, healthcare, and social stability. Traditional systems like the U.S. federal income tax reduce inequality but lack adaptability. Although models like the Saez Optimal Taxation adjust dynamically, they fail to address taxpayer heterogeneity and irrational behavior. This study introduces TaxAgent, a novel integration of large language models (LLMs) with agent-based modeling (ABM) to design adaptive tax policies. In our macroeconomic simulation, heterogeneous H-Agents (households) simulate real-world taxpayer behaviors while the TaxAgent (government) utilizes LLMs to iteratively optimize tax rates, balancing equity and productivity. Benchmarked against Saez Optimal Taxation, U.S. federal income taxes, and free markets, TaxAgent achieves superior equity-efficiency trade-offs. This research offers a novel taxation solution and a scalable, data-driven framework for fiscal policy evaluation. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.02838 |
| By: | Álvarez, Andrés (Universidad de los Andes); Castañeda, Brigitte (Universidad de los Andes); Hofstetter Gascón, Marc (Universidad de los Andes) |
| Abstract: | How do subnational tax collection efforts respond to windfall revenues from natural resource royalties? Conversely, what are the fiscal implications when these revenues decline? This paper investigates the effects of Colombia’s 2012 reform, which substantially restructured the allocation of mining royalties among municipalities. By analyzing this legal shift, we assess changes in municipal tax collection behavior. Municipalities that experienced a reduction in royalties intensified their tax collection efforts; however, these efforts did not fully offset the revenue losses. In contrast, municipalities that benefited from increased royalties reduced their tax collection activities, resulting in no net change in overall municipal income. These findings contribute to the literature on the resource curse by offering a subnational perspective on the fiscal dynamics of resource windfalls |
| Keywords: | Taxes; royalties; resource curse. |
| JEL: | H71 H72 H83 P11 |
| Date: | 2025–06–16 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021389 |
| By: | Paweł Doligalski; Piotr Dworczak; Mohammad Akbarpour; Scott Duke Kominers* |
| Abstract: | Policymakers often distort goods markets to effect redistribution—for example, via price controls, differential taxation, or in-kind transfers. We investigate the optimality of such policies alongside the (optimally-designed) income tax. In our framework, agents differ in both their ability to generate income and their consumption preferences, and a planner maximizes a social welfare function subject to incentive and resource constraints. We uncover a generalization of the Atkinson-Stiglitz theorem by showing that goods markets should be undistorted if the heterogeneous consumption tastes (i) do not affect the marginal utility of disposable income, (ii) do not enter into the social welfare weights and (iii) are statistically independent of ability. We also show, however, that market interventions play a role in the optimal resolution of the equity-efficiency trade-off if any of the three assumptions is relaxed. In a special case of our model with linear utilities, binary ability, and continuous willingness to pay for a single good, we characterize the globally optimal mechanism and show that it may feature meanstested consumption subsidies, in-kind transfers, and differential commodity taxation |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/787 |
| By: | Gunther Capelle-Blancard (Université Paris 1 Panthéon-Sorbonne, Centre d'Econonomie de la Sorbonne); Avinash Persaud (Inter-American Development Bank - IADB) |
| Abstract: | Mobilising substantial new resources is essential to address the climate crisis, particularly for low-income developing countries disproportionately affected by its impacts. Financial Transactions Taxes (FTTs) on equity trading, already implemented in several countries and generating around $17 billion annually, represent an underutilised but promising revenue stream. Drawing on existing implementations, particularly in France and the UK, the paper evaluates legal feasibility and revenue potential. We argue that expanding and harmonising such levies — designed with simplicity, enforceability, and fairness in mind —could raise an additional $87 billion per year, significantly contributing to climate action, especially related loss and damage needs. In the context of the Global Solidarity Levies Task Force (GSLTF) initiated at COP28, the study highlights the FTT as a technically feasible, low-cost, and non-distortive mechanism to raise climate finance quickly and effectively, fulfilling the criteria sought by GSLTF and offering a practical path forward in the broader effort to scale up international development and climate funding |
| Keywords: | Financial transaction tax; Securities Transaction Tax; Tobin tax; Innovative financing |
| JEL: | G21 H25 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:25011 |
| By: | Gagnie Pascal Yebarth (CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre) |
| Abstract: | This paper compares ad valorem and per-unit taxes in a bilateral market where all traders have market power. To do so, we use a simple prototype of strategic market games, namely bilateral oligopoly models, and show that ad valorem taxation welfare-dominates per-unit taxation under strategic bilateral trade. Moreover, ad valorem and per-unit taxes have qualitatively different effects on strategic equilibrium offers. |
| Keywords: | Ad valorem taxation, Noncooperative oligopoly, Per unit taxation, Welfare |
| Date: | 2025–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05066263 |
| By: | Gustafsson, Johan (Department of Economics, Umeå University); Lanot, Gauthier (Department of Economics, Umeå University) |
| Abstract: | We analyze the impact of increased automation on the size and distribution of pension benefits, as well as on the optimal size and design of public pension systems. To this end, we build an overlapping generations model of a closed economy with heterogeneous agents who make decisions regarding skill formation, consumption, savings, and retirement. Automation is conceptualized either in terms of capital-skill complementarity or in a task-based fashion. We find that any productivity gains from automation, realized as increased capital returns, disproportionately benefit high-skilled workers who are less dependent on illiquid public pensions. A redistributive pension system can reduce public pension inequality but may increase inequality in private retirement savings. In our calibrated economy, the optimal size of the pension system is larger in the task-based specification, where the displacement effects of automation are accounted for. |
| Keywords: | Automation; General Equilibrium; Overlapping Generations; Public Pensions |
| JEL: | H55 J22 J26 |
| Date: | 2025–06–13 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:umnees:1036 |
| By: | Søren Bo Nielsen; Dirk Schindler; Guttorm Schjelderup |
| Abstract: | We study how the OECD transfer pricing guidelines aimed at curbing tax-motivated transfer pricing practices affect investment incentives. Our theoretical model integrates the different OECD's transfer pricing methods into the tax planning cost function of an MNC to evaluate how the choice of transfer price and quantity produced determine the amount of profit shifted. When the transfer pricing method used emphasizes the choice of transfer price over the choice of the quantity of the intermediate good, tax-motivated transfer pricing has positive investment effects. However, when the transfer pricing method treats profit shifting by price and quantity symmetrically, tax-motivated transfer pricing does not impact investment on the intensive margin. Our study has potential policy implications and also produces suggestions for empirical research on transfer pricing and investment. |
| Keywords: | multinational corporations, corporate tax avoidance, transfer pricing, OECD transfer pricing rules, investment effects |
| JEL: | H25 F23 M48 H26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11887 |
| By: | Oscar Claveria (AQR-IREA, Universitat de Barcelona, Spain.); Petar Soric (Faculty of Economics and Business, University of Zagreb, Croatia.) |
| Abstract: | This study examines the relationship between economic uncertainty and the redistributive effect of taxes and government transfers in the UK and the US over the period 1980-2021. We find that the sign of the relationship between uncertainty and redistribution goes from being negative at the beginning of the 1980s to taking a positive and significant sign in recent years. In the US, economic uncertainty Granger-causes the redistributive effect of taxes and transfers in the short run, but the same does not hold for the UK. |
| Keywords: | economic uncertainty; redistributive policy; income inequality; taxes; government transfers. JEL classification: C50, D30, E62, H50. |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:ira:wpaper:202415 |
| By: | Immervoll, Herwig (OECD, Paris); Pasteiner, Felizia (OECD) |
| Abstract: | Economic crises produce rapid and sizable shifts in the demand for social support. Means-tested cash transfers, such as 'social assistance' programmes and related minimum-income benefits (MIB) typically function as benefits of last-resort, filling some of the support gaps left by other government transfers and are key pillars of strategies to alleviate hardship and prevent long-term damage from episodes spent in poverty. This paper discusses crisis-related challenges for MIB programmes, focussing on support for working-age individuals and their families, and drawing on the experience of OECD countries during the COVID-19 pandemic and the subsequent cost-of-living crisis. It compares MIB provisions before these crises, surveys countries’ approaches and reforms in subsequent years, and distils lessons for making MIBs more effective, responsive and crisis ready. |
| Keywords: | COVID-19, economic crisis, social assistance, minimum-income benefits, inflation, poverty |
| JEL: | H53 H31 D31 I38 H12 E66 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17943 |
| By: | Li, Mingjian |
| Abstract: | This study examines whether Medicaid expansion under the Affordable Care Act (ACA) led to strategic income reductions to qualify for coverage. Using monthly data from the Survey of Income and Program Participation (2013–2019) and a regression discontinuity design, this paper finds that childless households in expansion states with earnings just above the eligibility threshold reduced their lowest monthly earnings by 39 percentage points of the Federal Poverty Level (roughly $700 for a two-person household) relative to those just below. The effect intensified as the mandate penalty increased and diminished after its repeal. Evidence suggests earnings adjustments along both intensive and extensive margins. The paper reinforces the validity of using the lowest monthly earning to identify Medicaid eligibility and provides the first evidence of a substantial labor supply response to the ACA |
| Keywords: | Medicaid; The ACA; Mandate Penalty; Labor Supply; Earning Adjustments |
| JEL: | H31 I13 I18 J22 |
| Date: | 2025–05–29 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125043 |
| By: | Oscar Claveria (AQR-IREA, University of Barcelona, Spain.) |
| Abstract: | This study examines the relationship between redistributive efforts and human development in 12 Latin American countries over the period 2000–2021. With the aim of evaluating the link between both variables throughout the distribution the analysis is based on quantile regression. Overall, the results suggest that greater redistribution is associated with higher development. This result holds for all ranges of the distribution and is robust to different specifications. The analysis of the redistributive effect of taxes and government transfers is extended to the different dimensions of development —health, education and economy—, finding that education is the component that is most significantly affected by increases in redistribution. Positive coefficients are also obtained for the other two components, although they are only significant at the centre of the distribution in the case of life expectancy, and at high levels of per capita income. |
| Keywords: | income inequality; redistributive policy; taxes; government transfers; human development. JEL classification: C50; D30; E62; H50. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ira:wpaper:202417 |