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on Public Economics |
| By: | José María Tubío-Sánchez; Santiago Lago-Peñas; Xoaquín Fernández-Leiceaga; María Cadaval-Sampedro |
| Abstract: | Although an extensive theoretical literature debates the advantages of taxing wealth stocks versus capital income, the role of party ideology in shaping these fiscal tools remains under-explored. This study investigates the causal effect of political ideology on local property taxation in Spain, comparing a recurrent tax on property wealth with a capital gains tax on property transfers, a non-mandatory tax. By employing a regression discontinuity design on close-election outcomes from 2011 to 2015, we isolate the impact of left-wing government control. We find that left-wing governments increase effective property tax rates by an amount approximately 30% greater than right-wing governments. For the capital gains tax, however, ideology primarily influences the adoption decision (left-wing governments are 9% more likely to implement it) but not the level at which it is set, which is driven instead by technical and market factors. These findings demonstrate that the influence of political ideology is not uniform across property tax mechanisms. It strongly affects recurrent wealth taxes but plays a more limited role in transaction-based capital gains taxes after their initial adoption. |
| Keywords: | Property taxation; political ideology; regression discontinuity; capital gains; Spain |
| JEL: | H71 H20 H30 C21 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:ida:wpaper:wp2502 |
| By: | Claudio Agostini; Zareh Asatryan; Laurent Bach; Govindadeva Bernier; Marinho Bertanha; Katarzyna A. Bilicka; Anne Brockmeyer; Jaroslav Bukovina; Guillermo Falcone; Pablo Garriga; Yuxuan He; Petr Janský; Evangelos Koumanakos; Tomáš Lichard; Tomás Martins; Ján Palguta; Elena Patel; João Pereira dos Santos; Louis Perrault; Thomas Schwab; Nathan Seegert; Oliver Škultéty; Kristina Strohmaier; Maximilian Todtenhaupt; Guillermo Vuletin; Branislav Žúdel |
| Abstract: | Do firms respond similarly to corporate tax incentives across countries? We provide globally comparable estimates of the corporate elasticity of taxable income using administrative tax return data from sixteen countries and a unified empirical framework. Exploiting bunching at a common kink, zero taxable income, we estimate elasticities ranging from 0.08 to 1.9, with an average of 0.79. To explain this heterogeneity, we link elasticities to tax policy, firm characteristics, and country fundamentals. These differences imply that identical corporate tax reforms can generate sharply different revenue effects across countries, leading to substantial heterogeneity in the efficiency costs of corporate taxation. |
| JEL: | C14 H25 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34945 |
| By: | Advani, Arun; Summers, Andy |
| Abstract: | We discuss the measurement of top incomes and wealth in the UK and options for reforming their taxation. First, we highlight the importance of capital gains and migration in understanding long-term trends in top income shares and of survey under-coverage at the top in understanding top wealth shares. We next consider the scope for reforms to the taxation of capital to tackle these inequalities, whilst also improving the efficiency of taxation, emphasizing the roles of capital gains tax, inheritance tax and wealth taxes. Finally, we examine the question of who is taxed, including the tax treatment of highly mobile individuals and of trusts. |
| Keywords: | capital gains tax; income inequality; non-doms; tax; wealth inequality; wealth tax |
| JEL: | J1 F3 G3 |
| Date: | 2024–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137520 |
| By: | Tania Masi; Antonio Savoia; Kunal Sen |
| Abstract: | An influential literature suggests that the rise of taxation should come with a 'governance dividend': the quality of government should improve, because the taxpaying citizenry will subject the ruler to increased scrutiny. While this fits the history of nowadays advanced economies, it is less clear whether a governance dividend can materialize in less developed economies and, above all, which taxes are more likely to produce it. |
| Keywords: | Taxation, Income tax, Governance, Institutions, Economic development |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2026-22 |
| By: | Federico Corredor (Public Finance Research Cluster, Andrew Young School of Policy Studies, Georgia State University) |
| Abstract: | The Tax Cuts and Jobs Act of 2017 capped the federal deduction for state and local taxes (SALT), increasing the tax price of local public services for high-income residents in high-tax jurisdictions. This paper examines the impact of this policy on local government finances, exploiting variation in exposure across counties based on average pre-reform SALT deductions. Counties most exposed to the cap did not reduce public expenditures, experience declines in own-source revenues, or shift toward non-deductible revenue sources. These findings challenge the view that federal deductibility is essential for sustaining local fiscal capacity and underscore both the central role of property taxation in local public finance and the resilience of subnational governments to federal tax policy shocks. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ays:cslfwp:cslf2601 |
| By: | Esteban Garcıa-Miralles (Banco de Espana); Maximilian Freier (ECB); Sara Riscado (OECD, on leave from Banco de Portugal); Chrysa Leventi (European Commission, Joint Research Centre); Alberto Mazzon (European Commission, Joint Research Centre); Glenn Abela (Central Bank of Malta); Laura Boyd (Central Bank of Ireland); Baiba Brusbarde (Latvijas Banka); Marion Cochard (Banque de France); David Cornille (National Bank of Belgium); Emanuele Dicarlo (Banca d’Italia); Ian Debattista (Central Bank of Malta); Mar Delgado-T´ellez (Banco de Espana); Mathias Dolls (ifo Institute); Ludmila Fadejeva (Latvijas Banka); Maria Flevotomou (Bank of Greece); Florian Henne (Banque centrale du Luxembourg); Alena Harrer-Bachleitner (Office of the Austrian Fiscal Council); Viktor Jaszberenyi-Kiraly (Magyar Nemzeti Bank); Max Lay (ifo Institute); Laura Lehtonen (De Nederlandsche Bank); Mauro Mastrogiacomo (De Nederlandsche Bank); Tara McIndoe-Calder (Central Bank of Ireland); Mathias Moser (Oesterreichische Nationalbank); Martin Nevicky (National Bank of Slovakia); Andreas Peichl (ifo Institute); Myroslav Pidkuyko (Banco de Espana); Mojca Roter (Banka Slovenije); Frederique Savignac (Banque de France); Andreja Strojan Kastelec (Banka Slovenije); Vaidotas Tuzikas (Lietuvos bankas); Nikos Ventouris (Bank of Greece); Lara Wemans (Banco de Portugal) |
| Abstract: | This paper presents a comprehensive characterization of “fiscal drag†—the increase in tax revenue that occurs when nominal tax bases grow but nominal parameters of progressive tax legislation are not updated accordingly—across 21 European countries using a microsimulation approach. First, we estimate tax-to-base elasticities, showing that the progressivity built in each country’s personal income tax system induces elasticities around 1.7–2 for many countries, indicating a potential for large fiscal drag effects. We unpack these elasticities to show stark heterogeneity in their underlying mechanisms (tax brackets or tax deductions and credits), across income sources (labor, capital, self-employment, public benefits), and across the individual income distribution. Second, we extend the analysis beyond these elasticities to study fiscal drag in practice between 2019 and 2023, incorporating observed income growth and legislative changes. We quantify the actual impact of fiscal drag and the extent to which government policies have offset it, either through indexation or other reforms. Our results provide new insights into the fiscal and distributional effects of fiscal drag in Europe, as well as useful statistics for modeling public finances. |
| JEL: | D31 H24 E62 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1132 |
| By: | Sajid, Muhammad Hammad; Ali, Amjad; Jadoon, Atif Khan |
| Abstract: | This study explores the relationship between artificial intelligence, automation, and tax compliance and enforcement, focusing on the development and implementation of smart tax systems in various countries. Faced with persistent challenges such as tax evasion, non-compliance, and operational inefficiencies, many tax administrations worldwide have adopted emerging digital technologies to modernize their systems. The study employs a quantitative research design using secondary data to analyze trends in tax-to-gross domestic product ratios, voluntary compliance rates, and enforcement outcomes before and after the implementation of artificial intelligence. The findings indicate that integrating artificial intelligence and automation into tax processes leads to substantial improvements in compliance behavior, fraud detection, and revenue collection. Countries that have implemented electronic invoicing, predictive analytics, and intelligent audit tools have achieved greater enforcement capacity and improved taxpayer services, particularly where digital infrastructure and effective governance are present. While advanced economies typically lead in digital readiness and transformation, many emerging and developing countries are also making significant progress through automation, expanding their tax base, and increasing transparency. The study concludes that adopting smart tax systems is a crucial step toward more responsive, transparent, and data-driven governance. However, their effectiveness hinges on specific measures such as tailoring implementation strategies to each country’s digital maturity, enacting clear legal frameworks to govern automated decision-making, and ensuring continuous investment in digital infrastructure, cybersecurity, and capacity-building within tax authorities. |
| Keywords: | Artificial Intelligence, Tax Compliance, Smart Tax Systems, Automation, Revenue Collection |
| JEL: | O3 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127541 |
| By: | Pablo Beramendi; Melissa Rogers |
| Abstract: | This paper examines how spatial inequalities interact with asymmetric decentralization to shape redistributive effort and distributional outcomes. Using cross-national evidence on top income and wealth shares, progressive tax structures, and measures of asymmetric regional authority and legislative malapportionment, the authors find: (i) higher spatial inequality is associated with greater concentration at the top of the income and wealth distributions; (ii) asymmetric regional authority is, on average, linked to lower inequality and higher progressive tax shares, though its egalitarian association weakens as spatial inequality rises; and (iii) legislative malapportionment correlates with higher inequality and lower progressive taxation and typically amplifies the inequality-raising role of spatial disparities. The results highlight that institutional asymmetries condition the capacity and willingness of states to tax and redistribute under pronounced territorial disparities. |
| Keywords: | asymmetric decentralization, spatial inequality, progressive taxation, malapportionment, regional authority, redistribution |
| Date: | 2026–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:ida:wpaper:wp2609 |
| By: | Deng, Haotian (Ghent University); Desiere, Sam (Ghent University); Cockx, Bart (Ghent University); Bijnens, Gert (National Bank of Belgium) |
| Abstract: | This paper studies how employment subsidies for start-ups shape their performance. We exploit an unexpected policy reform in Belgium that permanently exempted start-ups hiring their first employee from payroll taxes for that employee. Using firm-level administrative data and a regression-discontinuity-in-time design, we find that subsidized post-reform startups employed fewer workers and generated lower output, value added, and profits compared to pre-reform start-ups. However, post-reform start-ups were more likely to survive as employers. These effects emerged within the first year after hiring and remained stable over a medium horizon of three years. Our findings indicate a compositional shift: the subsidy primarily induced low-productivity firms to enter the market. As most firms nowadays are nonemployers, our results meaningfully generalize the theoretical implications of standard neoclassical entrepreneurship models (employee–employer margin) and fill the important gap of the nonemployer–employer margin. |
| Keywords: | entrepreneurship, start-up, employment subsidy, tax reduction, labor demand, small firms |
| JEL: | H25 J23 J24 J38 L25 L26 M51 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18414 |
| By: | Kevin Parra Ramirez (Sciences-Po, Banque de France); Vincent Vicard (CEPII) |
| Abstract: | While multinational enterprises (MNEs) shift hundreds of billions in profits to low-tax jurisdictions annually, how they do remains disputed. Using firm-level data for France in 2018, we provide the first joint quantification of the three main profit-shifting channels: transfer mispricing in goods trade, intangible assets and services traded with tax havens, and intra-firm debt. We find empirical evidence for all three instruments, but transfer mispricing dominates quantitatively (€10 billion, 0.4% of GDP), followed by services (up to €6 billion) and debt (€2 billion). Although significant, these direct estimates account for half of total missing profits in France, as estimated indirectly from the location of MNE profits. We document two key blind spots likely to close this gap: cross-border digital payments by households and understudied debt instruments (e.g., securities). |
| Keywords: | Tax avoidance, Multinational firms, Profit shifting, FDI, Trade |
| JEL: | H26 H25 H32 F14 F23 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:043 |
| By: | Mathias Dolls; Esteban García-Miralles; Max Lay; Andreas Peichl |
| Abstract: | Key MessagesIn 21 EU countries, tax-to-base (TTB) elasticities mostly range from 1.7 to 2: tax burdens tend to respond similarly to nominal income growtTTB elasticities tend to be highest for labor income, followed by capital income and pensions and benefitsFiscal drag reduces the progressivity of the tax system, with lower-earnings groups facing higher TTB elasticitiesIn 2019–23, about one-third of the countries analyzed only partially offset fiscal dragIn these countries, tax revenue in 2023 was higher than in a scenario with full indexation |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:econpb:_82 |
| By: | Ricci Mattia (European Commission - JRC); Lanterna Federica |
| Abstract: | The application of reduced VAT rates in the EU generally aims to alleviate the regressivity of consumption taxation. However, while these measures generate redistribution across income groups, they also create redistribution effects within income groups, leading to arbitrary redistribution among households with similar incomes but different consumption patterns. Using the Analysis of Gini (ANOGI) decomposition, we evaluate the redistributive impact of reduced VAT rates across EU Member States. Our results indicate that, while reduced VAT rates lower the regressivity of VAT taxation, their total redistributive effect is modest. That is because the between-group pro-redistributive effect is largely offset by the within-group anti-redistributive one. This analysis highlights the limited effectiveness of reduced VAT rates as a tool for redistribution |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202602 |
| By: | Antonacci, Paulo; Chattha, Muhammad Khudadad; Soko, Naranggi Pramudya; Tyas, Prabaning |
| Abstract: | This study evaluates whether low-cost digital nudges delivered via WhatsApp can improve property tax compliance in Gorontalo, Indonesia. In a randomized controlled trial, individuals were as-signed to receive either (i) a soft-tone message emphasizing civic duty and public benefits, (ii) a hard-tone message highlighting penalties and consequences, or (iii) no message (control). Four findings emerge. First, although messages referenced overdue obligations, the soft-tone nudge substantially increased current-year compliance: payment of the fiscal year 2024 bill rose by 9–11 percentage points from two weeks through the payment deadline and remained 9.9 percentage points higher at six months, relative to a 38 percent control mean at the deadline. Second, the soft-tone message narrowed and statistically eliminated the compliance gap between historically high- and low-compliance groups. Third, framing mattered: the soft-tone message consistently outperformed the hard-tone message at longer horizons. Fourth, while the hard-tone message generated short-run increases in compliance, these effects dissipated over time, consistent with intertemporal substitution (treated taxpayers paying earlier rather than more). Overall, the results show that behaviorally informed messaging can meaningfully improve tax collection in low-capacity settings, especially when designed to fit local behavioral and institutional context. |
| Date: | 2026–02–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11320 |
| By: | Ismaila Y. Jammeh (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (UNIVPM)); Federico Giri (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (UNIVPM)); Alberto Russo (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (UNIVPM)) |
| Abstract: | This paper studies the long-run distributional effects of inheritance taxation and redistribution within an agent-based overlapping-generations model featuring heterogeneous agents who differ in demographics, returns to wealth, education, and consumption behaviour. The results show that progressive inheritance taxation combined with redistribution substantially reduces wealth inequality, while consumption inequality declines more gradually and with a delay. This lag reflects lifecycle dynamics: younger households predominantly save transfers, whereas middle-aged households consume at peak earning stages. Importantly, these policies do not erode aggregate wealth. Instead, they reallocate wealth across households without shrinking the total wealth stock. The top 1% and top 10% experience losses in both wealth shares and absolute wealth levels, while the bottom 50% gain in both dimensions. These effects intensify over time and become particularly pronounced after several decades, as redistribution translates into higher human capital accumulation and improved lifetime earnings for lower-wealth households. Overall, the findings suggest that the conventional equity–efficiency trade-off is significantly weakened when tax revenues operate as a form of pre-distribution rather than mere ex post redistribution. In this framework, the true efficiency loss stems not from taxation, but from the long-run compounding of dynastic wealth concentration under policy inaction. |
| Keywords: | Intergenerational Transmission, Wealth Inequality, Agent-Based Model, Overlapping Generations, Inheritance taxation, Redistribution |
| JEL: | C63 D31 H23 J11 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:anc:wpaper:505 |
| By: | Berghäll, Elina |
| Abstract: | Amid aid cuts, developing countries’ public finance needs are constant and growing. Tax-to-GDP ratios exhibit a positive correlation with GDP per capita globally, suggesting that economic growth in developing countries could enhance domestic revenue mobilization (DRM) and reduce aid dependence over time. Yet there is little evidence to support this in the existing literature. World Bank income status upgrades represent economic growth milestones that may signal future aid reductions, potentially incentivizing governments to increase tax collection. Using synthetic control methods and synthetic difference-in-differences on panel data from the UNU-WIDER Government Revenue Dataset and World Development Indicators (1980-2022), this study examines whether such upgrades result in tax and government revenue increases as a share of GDP in sub-Saharan Africa (SSA). Results reveal that income status upgrades rarely have significant positive impacts on fiscal outcomes. By contrast, extensive robustness checks, including event-study difference-in-differences analyses, show upgrades to lower-middle or upper-middle-income status to be associated with a decline in public revenue per GDP. These findings imply that upgrades cannot be expected to meaningfully enhance DRM in SSA. |
| Keywords: | synthetic control method (SCM), synthetic difference-in-differences, tax revenue; income status, development aid, sub-Saharan Africa, H20, H27, H71, O11, O40, O55, fi=Verotus|sv=Beskattning|en=Taxation|, |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:183 |
| By: | François Geerolf (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research) |
| Abstract: | The paper analyzes a frequently overlooked effect of inflation, referred to as the "inflation tax": the real loss of purchasing power borne by economic agents as a result of inflation that is not taken into account in the official methodology of the national accounts. This tax, a concept described by John Maynard Keynes (1919) and popularized as a form of "taxation without legislation" by Milton Friedman (1974), is not incorporated into standard public statistics. Its omission leads to an overestimation of the growth in household purchasing power, an overestimation of the saving rate, and an overestimation of interest expenditures and the public deficit when relying on unadjusted accounting data. Through numerical examples (for instance, the Livret A savings account or outstanding life-insurance assets), the analysis shows that, in periods of significant inflation, the gap between observed nominal returns and real returns adjusted for inflation represents a substantial transfer of wealth that is not reflected in the national accounts. The paper emphasizes the importance of incorporating this inflation tax for a rigorous interpretation of macroeconomic indicators and for a more accurate assessment of public debt sustainability, the real saving rate, and the evolution of household purchasing power. |
| Abstract: | On analyse un effet souvent négligé de l'inflation, appelé « taxe inflationniste » : la perte réelle de pouvoir d'achat que subissent les agents économiques du fait d'une inflation non prise en compte dans la méthodologie officielle des comptes nationaux. Cette taxe, concept décrit par Keynes (1919) et popularisé comme forme de « taxation sans législation » par Friedman (1974), n'est pas intégrée dans les statistiques publiques usuelles. Or, son omission conduit à une surestimation de la croissance du pouvoir d'achat des ménages, à une surestimation du taux d'épargne et à une surestimation de la charge d'intérêt et du déficit public, lorsqu'on se fonde sur des séries comptables sans correction. À travers des exemples numériques (par exemple pour le Livret A ou l'encours des assurances-vie), l'analyse montre que, en période d'inflation significative, l'écart entre les rendements nominaux observés et le rendement réel, corrigé de l'inflation, représente un transfert substantiel de richesse qui n'est pas reflété dans les comptes nationaux. Le document souligne l'importance d'intégrer cette taxe inflationniste pour une interprétation rigoureuse des indicateurs macroéconomiques, et pour mieux apprécier la soutenabilité de la dette publique, le taux d'épargne réel et l'évolution du pouvoir d'achat des ménages. |
| Keywords: | inflation, purchasing power, saving rate, public deficit, public debt, national accounts, gross disposable income, real returns, monetary erosion, fiscal sustainability, public finances, macroeconomics, monetary policy, implicit transfers, inflation tax, dette publique, taxe inflationniste, pouvoir d’achat, taux d’épargne, déficit public, comptes nationaux, revenu disponible brut, rendements réels, érosion monétaire, soutenabilité budgétaire, finances publiques, macroéconomie, politique monétaire, transferts implicites |
| Date: | 2024–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05506068 |
| By: | Masaya NISHIHATA; Yohei KOBAYASHI; Takayuki ISHIKAWA |
| Abstract: | This study conducted two natural field experiments in Yokohama City, Japan, to evaluate the effectiveness of behavioral nudges in promoting automatic debit registration for property tax payments. While much of the existing literature on tax compliance focuses on reminder letters, relatively little attention has been paid to payment method choice, despite its potential to reduce administrative costs associated with reminders and enforcement. We find that a nudge flyer and the inclusion of the owner code required for the application increase the probability of applying for automatic debit by 2.7 and 2.8 percentage points, respectively. When implemented together, the combined intervention increases adoption by 8.8 percentage points, suggesting complementarities between benefit-enhancing and cost-reducing components. Despite the increase in automatic debit adoption, we find no evidence that these interventions improve on-time payment within the time frame observed in our experiments. This may reflect low baseline delinquency among new taxpayers or the possibility that the interventions primarily affect taxpayers who would have paid on time even in the absence of automatic debit. Taken together, our findings highlight both the potential and the limits of behavioral nudges in improving tax administration outcomes. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26023 |
| By: | Brian Fabo (National Bank of Slovakia); Pavel Gertler (National Bank of Slovakia); Peter Toth (National Bank of Slovakia) |
| Abstract: | This paper examines how consumer prices responded to two permanent VAT reductions in Slovakia, which lowered the rate from 20% to 10%, first for essential staples in 2016, and later for a broader set of goods in 2020. Leveraging detailed scanner data and a synthetic difference- in-differences framework, we find that VAT pass-through is highly heterogeneous: it can be full or incomplete, depending on product attributes, demand elasticity, and policy design. The 2016 reform, which targeted clearly defined essential goods, led to complete and persistent price re- ductions. In contrast, the 2020 reform, applied to a loosely defined category of healthy goods, produced only partial and short-lived price effects. Our findings underscore the importance of careful policy design, and suggest that well-targeted VAT cuts can deliver meaningful consumer price relief, while broader or less transparent interventions may instead boost retailer margins without durable benefits for shoppers. |
| JEL: | D12 E62 H22 H25 H31 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1122 |
| By: | Carlo Gianelle; Agnese Sacchi; Simone Salotti |
| Abstract: | This paper analyses Italy`s persistent asymmetric fiscal decentralisation, confirming major structural differences between special statute regions and ordinary statute regions, with implications for cohesion and service provision. |
| Keywords: | asymmetric decentralisation, fiscal autonomy, regional governments, municipal governments |
| JEL: | H71 H72 H77 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:ida:wpaper:wp2606 |