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on Public Economics |
| By: | Etienne Lehmann; Eddy Zanoutene (CY Cergy Paris Université, THEMA) |
| Abstract: | We study the optimal taxation of corporate and dividend income when entrepreneurs can use retained earnings to reduce their tax burden. We show that eliminating dividend taxes while increasing the corporate income tax (CIT) to keep investment unchanged raises total tax revenue. Our simulations suggest net revenue gains of 0.1-0.4% of GDP. In an infinite-horizon model, the optimal policy sets dividend taxes to zero in every period. As the discount factor approaches one and when the planner values only workers’ welfare, the optimal steady-state CIT converges to a standard inverseelasticity rule. |
| Keywords: | Corporate Tax, Dividend Tax, Optimal Taxation, Capital Taxation |
| JEL: | H21 H24 H25 H26 H32 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ema:worpap:2026-02 |
| By: | Tommaso Giommoni; Gabriel Loumeau; Marco Tabellini |
| Abstract: | In this paper, we provide systematic evidence in support of the long-standing hypothesis that taxation was an important driver of the French Revolution. We first document that areas with heavier taxes experienced more riots between 1750 and 1789 and voiced more complaints against taxation in the cahiers de doléances of 1789. After showing that these effects are driven by indirect taxes, we exploit sharp spatial differences in the salt tax and the traites—the two principal indirect levies—to implement a regression discontinuity design (RDD). We find that unrest was higher on the high-tax side of the border. These effects intensified over time, peaking in the 1780s, and were stronger where fiscal disparities were larger and Enlightenment ideas more widespread. We further show that adverse weather shocks amplified unrest in high-tax municipalities. We then document that taxation fueled the spread of unrest during the Grande Peur—the wave of revolts that swept France in July 1789 and culminated in the abolition of feudal privileges. Finally, we link taxation to revolutionary politics in Paris, documenting that deputies from heavily taxed constituencies were more likely to frame the tax system as oppressive, support the Revolution, demand the abolition of the monarchy, and vote for the king's execution. |
| Keywords: | Taxation, French Revolution, state capacity, regime change. |
| JEL: | D74 H20 H31 N43 O23 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:irn:wpaper:26-02 |
| By: | Keller, Andrew |
| Abstract: | The One Big Beautiful Bill (OBBB), signed in July 2025, reshapes the farm tax landscape primarily by preventing the scheduled 2026 sunset of major 2017 Tax Cuts and Jobs Act provisions and by adding targeted new benefits for producers. This post summarizes the law’s effects across three practical domains for Midwestern farm operations. First, it locks in lower individual income tax rates and the higher standard deduction, avoiding an automatic tax increase for most farm families, while also strengthening and permanently extending the Child Tax Credit and adding a temporary senior deduction for 2025–28. Second, it improves farm business investment incentives by making the 20% qualified business income deduction permanent, restoring 100% bonus depreciation, and expanding Section 179 expensing, alongside other provisions that affect interest limits, SALT, and clean fuel incentives. Third, it supports intergenerational succession by permanently increasing the estate and gift tax exemption to $15 million per person (indexed) and preserving stepped-up basis, helping most family farms transfer assets without federal estate tax exposure. |
| Keywords: | Agribusiness, Agricultural and Food Policy, Agricultural Finance |
| Date: | 2025–07–21 |
| URL: | https://d.repec.org/n?u=RePEc:ags:arpcbr:391416 |
| By: | Elias Asproudis (Swansea University, School of Social Sciences, Department of Economics, UK); Eleftherios Filippiadis (Department of Economics, University of Macedonia, Greece) |
| Abstract: | This paper examines how environmental taxes, abatement effort, and green trade unions interact within a differentiated duopoly under decentralised and centralised wage setting structures. We show that trade union environmental awareness acts as a substitute for environmental taxation: as unions internalize local damages in wage negotiations, the regulator optimally chooses a lower emissions tax. Centralised wage bargaining leads to higher wages and lower emissions, while decentralised bargaining yields higher output, profits, and social welfare. From a policy perspective, we argue that incorporating green trade unions’ environmental preferences into environmental governance can improve efficiency of the environmental policy taxation. |
| Keywords: | environmental tax, abatement effort, green trade unions, environmental damages, labour market structure |
| JEL: | Q5 L13 D43 J5 H2 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2026_03 |
| By: | Laura Montenovo; Kosali I. Simon; Coady Wing |
| Abstract: | We examine how Medicaid expansion under the Affordable Care Act reshaped federal transfer inflows to counties using state Medicaid expansions between 2014 and 2017. We show that the ACA expansion increased federal Medicaid transfers by $361 per capita in expansion counties. Using our estimates, we forecast that non-expansion counties would gain $554 per capita if they expanded Medicaid. These transfers flow to counties with lower tax capacity and lower gross income. Our findings suggest that Medicaid expansion was a health policy intervention that also functioned as a budgetary mechanism reshaping federal to local transfers and fiscal smoothing across U.S. counties. |
| JEL: | H10 H20 H27 I13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34758 |
| By: | Vella, Francis |
| Abstract: | This paper examines the estimation of a simultaneous model of hours and wages. We argue the relationship between weekly hours worked and the hourly wage is due to increasing marginal tax rates. As the total wage increases, due to increasing hours, employers and employees avoid taxation by substituting wages with non-taxable non-wage benefits. This is attentuated by labor legislation entitling employees to employer provided benefits. We estimate a wage that is independent of any benefit effect and employ it in the labor supply functions. An estimator is presented for the wage/hours market locus and the structural labor supply function. An application to the data examined Moffitt (1984) supports the validity of the procedure. A second application reveals that a previous study which concluded that the labor supply function of young females is downward sloping is misleading. |
| Keywords: | Financial Economics, Labor and Human Capital, Public Economics |
| URL: | https://d.repec.org/n?u=RePEc:ags:monebs:267067 |
| By: | Diego Ascarza-Mendoza (School of Government and Public Transformation, Tecnológico de Monterrey); Tomás Rosé (Analysis Group) |
| Abstract: | This paper studies the welfare effects of expanding access to standard mortgage financing for factory-built homes. We begin by outlining the regulatory barriers that prevent many low- and middle-income U.S. households from using traditional mortgage credit in this segment. Compared with chattel loans—the primary financing instrument for manufactured homes—mortgages feature longer maturities, lower interest rates, and tax deductibility of interest payments. To evaluate the welfare consequences of equalizing these conditions, we develop a dynamic life-cycle model of housing decisions that highlights a key trade-off: manufactured homes are more affordable than site-built homes but face less favorable financing terms. The model is calibrated to match both the overall homeownership rate and the distribution of site-built versus manufactured homes in the U.S. South. Our results show that even under a conservative reform—granting tax deductibility alone, while holding interest rates and maturities fixed—welfare gains are substantial, equivalent to a 2% permanent increase in real income, or a 28% increase in lifetime income in present discounted value terms. |
| Keywords: | Factory Built Homes, Mortgages, Tax Deductions |
| JEL: | D6 E2 H2 R2 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:gnt:wpaper:23 |
| By: | Daniel M. Hungerman; Teresa Harrison; Sherry X. Li |
| Abstract: | Foundations are a rapidly growing source of charitable support, yet their effects on nonprofits remain poorly understood. We study applicants to a $100 million funding competition whose sponsoring foundation subsequently offered publicity, networking, and advice to a subset of unsuccessful entrants. This support substantially improved later fundraising for smaller charities. Our estimates indicate that the foundation’s support generated over $40 million in income in the years following the competition. These findings offer novel evidence of how large donors can influence nonprofit success even without awarding funds, and show how funding competitions might be structured to help charities raise additional resources. |
| JEL: | D64 H4 L3 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34773 |
| By: | Luiz de Mello; João Tovar Jalles |
| Abstract: | This paper investigates how spending rigidities—captured by the government wage bill—affect fiscal adjustment across advanced, emerging market and low-income economies over the period 1980–2023. Building on a simple model of fiscal adjustment under rigidity, we show that a larger wage bill constrains governments’ ability to undertake discretionary consolidation in response to debt pressures. Empirically, higher wage bills (in relation to GDP) are systematically associated with smaller improvements in the cyclically adjusted primary balance and lower probabilities of consolidation. Adjustment in such settings occurs disproportionately through cuts to flexible expenditure items, notably public investment, rather than through revenue-side measures. Political cohesion enhances the likelihood and size of adjustment, but its effectiveness diminishes when spending is rigid. These results remain robust to alternative measures of discretionary action, estimation methods and sample definitions, including instrumental variable specifications and Hamilton-filter-based cyclicality adjustments. The findings underscore that fiscal sustainability hinges not only on macroeconomic fundamentals but also on the structural composition of expenditure and the political capacity to overcome rigidity. |
| Keywords: | fiscal adjustment; spending rigidity; wage bill; political economy; fiscal consolidation. |
| JEL: | H50 H62 H63 E62 E63 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp04072026 |
| By: | Castro, Edgar; Yarygina, Anastasiya; Villalba Ortega, Matias Gabriel |
| Abstract: | This paper examines the effects of increased bureaucratic discretion in public procurement during the COVID-19 pandemic, when the Chilean government relaxed restrictions on direct deals and expanded discretionary authority for small contracts. While greater discretion can lower administrative costs and accelerate purchasing, it may also create opportunities for rent-seeking and inefficiency. Using contract-level procurement data from 2019 to 2021, we study how these regulatory changes affected purchasing outcomes. We find that discretion substantially reduced processing times and improved reporting quality. However, it also increased unit prices in larger contracts, whereas prices for smaller contracts remained stable. We further document significant bunching just below the threshold for non-competitive direct deals, consistent with strategic contract sizing and rent-seeking. Using these estimates, we show that savings from small contracts were outweighed by higher costs in larger ones, resulting in a net fiscal loss of approximately USD 99 million. Overall, discretion appears beneficial for low-value purchases but generates inefficiencies as contract size increases. |
| Keywords: | public procurement;Bureaucratic Discretion;Rent-seeking;Administrative Efficiency |
| JEL: | H11 H57 D73 D72 H83 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14492 |