|
on Public Economics |
| By: | Anmol Bhandari; Ellen McGrattan |
| Abstract: | We construct a firm-year panel of income-tax rate reconciliations from annual 10-K filings of public companies to study the effects of the Tax Cuts and Jobs Act (TCJA) on U.S. multinational profit shifting. These reconciliations decompose the gap between company-level effective tax rates and the federal statutory corporate tax rate, allowing us to isolate the contribution of foreign tax advantages before and after the reform. We find that TCJA significantly reduced the tax rate gap and increased effective tax rates for companies most exposed to pre-TCJA international tax benefits. This resulted in an onshoring of profits with foreign profit shares falling 1.3 percentage points per percentage point of tax increase. Among more exposed companies, we find no differential change in investment, employment, or the geographic distribution of sales and installed capital. A neoclassical model of a multinational that chooses where to book its income rationalizes this pattern: the reform raised the average tax on income booked abroad relative to income booked at home, which governs where profits are reported, while the marginal tax on capital, which governs investment, changed by an amount common to all firms. Controlling for deferred-tax windfall gains leaves our main results unchanged. |
| JEL: | F23 H26 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35805 |
| By: | Christl, Michael |
| Abstract: | Value-added tax (VAT) systems in EU Member States deviate substantially from a uniform-rate benchmark through reduced rates and exemptions, typically motivated by distributional concerns. This paper provides microsimulation evidence on the fiscal and distributional effects of the full set of VAT expenditures, including both reduced rates and the non-actionable exemption gap covering healthcare, education and financial services mandated by the EU VAT Directive, in five major EU economies (Germany, France, Italy, Spain and Poland) under the 2024 policy baseline. Using EUROMOD and its Indirect Tax Tool with EU-SILC 2022 microdata matched with EU-HBS 2015 expenditure data, and following a compensating variation welfare approach, we simulate a universal standard-rate VAT counterfactual and find that abolishing all VAT expenditures would reduce post-consumption-tax disposable income by 9-21% for bottom-decile households versus 3-5% for the top decile, with Italy and Spain displaying the most regressive reform-cost profiles. The difference in welfare loss between the bottom and top income deciles ranges from -6.3 percentage points in Poland to -16.3 percentage points in Italy. While VAT expenditures offer meaningful purchasing-power protection to lower-income households in proportional terms, this protection is poorly targeted in absolute terms because richer households capture a larger share of the implicit subsidy in absolute cash terms, and could be replicated more efficiently through targeted income transfers. We discuss implications for revenue-neutral VAT reform and the efficiency-equity trade-off in EU indirect taxation. |
| Keywords: | value-added tax, VAT expenditures, reduced rates, exemptions, income inequality, microsimulation, EUROMOD, indirect taxation, European Union |
| JEL: | H23 H25 D31 C15 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1828 |
| By: | Nilsson, Pia (Department of Economics and Management, University of Helsinki); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN)); Roedriguez del Valle, Adrian (Department of Economics and Management, University of Helsinki) |
| Abstract: | We examine how taxation of intergenerational transfers affects the allocation of productive assets within family firms. Using administrative registry data on family-farm successions in Sweden around the 2005 abolition of inheritance and gift taxes, we investigate how the successor’s share of land holdings in the parental and sibling generations responds to the removal of taxes. We use a quasi-experimental event-study design and find that the increase in the successor’s ownership share is about 10–11 percentage points larger among families with greater predetermined exposure to the pre-reform inheritance tax. Results also indicate that the reform led parents to transfer assets earlier and concentrate a larger share of productive assets in the successor through inter vivos gifts. Post-reform successions are associated with higher capital intensity, suggesting that inheritance and gift taxation extends beyond the direct tax burden, affecting property-right allocation and capital intensity in family-operated enterprises. |
| Keywords: | Inheritance taxation; Family firms; Ownership allocation; Capital intensity; Intergenerational transfers |
| JEL: | D13 D20 H20 |
| Date: | 2026–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1567 |
| By: | Shi, Yingxin; Shi, Xinyu |
| Abstract: | We exploit the staggered, province-level rollout of China's Fully Digitalized Electronic Invoice (the Shu-Dian- Piao, or FDEI) between late 2021 and 2023 to identify how invoice digitalization affects firms' formal compliance costs and tax compliance, and-most importantly-how these effects are distributed across parties with different bargaining power. Using firms in regions that never opened an FDEI issuance pilot within the window as controls and the Callaway and Sant'Anna (2021) estimator, which is robust to heterogeneous treatment timing, we document three findings. First, on average, firms' administrative- expense ratio rises by about 0.26 percentage points after treatment, with no detectable pre-trend; audit fees, financial-expense ratios, and top-five supplier/customer shares do not change significantly. Second, the increase is highly concentrated: it is about 0.33 percentage points for non-state-owned firms and 0.40 percentage points for small firms, while it is insignificant for state-owned and large firms. Third, tax compliance, measured by book-tax differences, the Desai-Dharmapala residual, and effective tax rates, does not improve on average or in any ownership/size subgroup. The claim robustly supported by the data is therefore the asymmetric incidence of formal compliance costs toward weaker market participants-not the stronger claim that compliance improvement is "decoupled" from compliance costs. The evidence should be read as short-run and conservative, given the concentration of treatment in 2023, the short post-period, and nationwide spillovers from the separately rolled-out receipt side. |
| Keywords: | electronic invoice, tax administration, compliance cost, incidence, staggered difference-in differences, China |
| JEL: | H26 H32 K34 O17 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344060 |
| By: | Paolo M. Panteghini |
| Abstract: | The new view holds that a dividend tax is capitalised and leaves the mature firm’s decisions undistorted, provided marginal investment is financed out of retained earnings. The firm reaches that regime by first withholding its earnings, and while it withholds them the dividend tax is not in force. This article places the two regimes inside a trade-off model with debt and endogenous default, so that maturity is an event the firm chooses and may never reach. The dividend tax does not reach the immature firm. It taxes the passage to maturity, and its whole content is one number, the value of a unit distributed relative to a unit retained. Lowering that number from unity to 0.60 lifts the expansion trigger by a factor of 3.4, cuts the probability of ever maturing from 59.8% to 23.7% and the value today of one unit paid at maturity by 90%. At the baseline a third of firms ever mature, and nine tenths of the firm’s discounted lifetime is spent in the regime in which the new view does not apply. The tax also creates the shield that pays for the passage: a firm that can recapitalise at maturity keeps maturing at dividend rates at which a firm that cannot borrow never does, provided the proceeds leave through repurchases rather than dividends. The firms that never mature are those whose expansion buys a small productivity gain and that cannot borrow when they make it. |
| Keywords: | new view, dividend taxation, firm life cycle, dynamic trade-off theory, growth option |
| JEL: | G31 G32 G33 H25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_13013 |
| By: | Nora Paulus (DF, Université du Luxembourg); Giuseppe Pulina (DEM, Université du Luxembourg); Patrice Pieretti (DEM, Université du Luxembourg); Benteng Zou (DEM, Université du Luxembourg) |
| Abstract: | "We analyze how lower barriers to labor mobility affect tax competition, labor allocation, wages, public revenues, and welfare in a two-country model. Govern- ments compete for mobile workers through labor income taxation, and national welfare is evaluated on a residence basis, including the mobility burden borne by migrants. Greater mobility intensifies tax competition, raises workers’ net wages in both countries, and reallocates labor and output toward the advanced economy. As a result, global welfare rises, while national welfare increases in the advanced coun- try and decreases in the lagging country. Because the advanced country’s welfare gain exceeds the lagging country’s welfare loss, there is sufficient aggregate welfare to make both countries better off through compensation. This possibility does not, however, imply that such a transfer is fiscally feasible. Since mobility reduces tax revenues in both countries, the required compensation cannot be financed from additional fiscal resources generated by liberalization. Labor-market integration is therefore welfare-feasible but not fiscally self-financing. Its implementation thus requires broader fiscal coordination or external funding." |
| Keywords: | "international labor mobility; tax competition; national welfare; compensating transfers; fiscal coordination." |
| JEL: | F22 H54 H87 J61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:26-13 |
| By: | Thomas, Joseph E. |
| Abstract: | This Comment argues that Internal Revenue Code § 280E unfairly penalizes state-licensed marijuana businesses by denying ordinary business deductions and taxing them on amounts that may exceed their actual profits. Examining the history of § 280E and recent challenges by marijuana dispensaries, the Comment contends that the provision undermines the ability-to-pay principle and threatens the viability of legitimate cannabis businesses operating under state law. It concludes that Congress should amend or repeal § 280E as applied to state-sanctioned marijuana companies. [This abstract was written by Microsoft Copilot, a generative artificial intelligence.] |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:osf:lawarc:ha468_v1 |
| By: | International Monetary Fund |
| Abstract: | Domestic Resource Mobilization (DRM is central to achieving sustainable financing for development, building fiscal buffers, and strengthening state capacity. Recent work by the IMF and the World Bank shows that many countries—especially low-income countries (LICs) and fragile and conflict-affected states (FCSs)—are still collecting less than 15 percent of GDP in tax revenue. World Bank and IMF research suggests that collection beyond this threshold is linked to lasting improvements in growth, public service delivery, and state capacity. DRM—central to the IMF-WBG three pillar approach to helping countries address liquidity challenges (IMF and World Bank 2024a)—is crucial for building fiscal space to advance public spending for development, reduce reliance on volatile external financing, support jobs and growth, and strengthen the social contract between the state and its citizens. |
| Keywords: | legislation Atlas; personal income; tax organization; public finance review; tax ratio; Program-for-Results financing; Administration in revenue administration; Tax administration core functions; Global; Africa |
| Date: | 2026–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfpps:2026/011 |
| By: | Heta Pöyliö |
| Abstract: | Social protection systems are considered the cornerstones of the welfare state, originally built to address inequalities, alleviate poverty, and mitigate social risks. Many European social protection systems have evolved into complex, multi-tiered 'puzzles' as they expand coverage to address new life-course risks. This has created systems in which navigating is a skill and access is unequal. This paper uses a recipiency-based approach to analyse the level of benefit complexity of European social protection systems, 'the puzzle', by counting how many different types of social cash benefits households receive in one year. A higher number reflects greater complexity of the income protection system. Using microdata from the Luxembourg Income Study across 25 European countries for the years 2000-2023, the results show that households, particularly families, can receive up to 15 different benefits as part of their annual income, although there is significant variation across countries and households. Benefit complexity has increased in some countries, whereas it has been relatively stable in others. The increase in benefit complexity is associated with higher access to benefits in Southern Europe across all household types, whereas in the Nordic countries, the rise in single-parent benefit complexity aligns with growing single-parent poverty rates. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:lis:liswps:922 |
| By: | Guillaume Chapelle; Alain Trannoy (CY Cergy Paris Université, THEMA) |
| Abstract: | Using French cadastral and transaction data, we study the effects of a VAT cut from 20% to 5.5% on new residential construction in and around about 600 deprived neighborhoods. The reduced rate raised the housing stock by 2% in floorspace terms, equivalent to roughly two years of residential investment over a decade, and generated a gain in total surplus of about €13.6 billion. We estimate the price elasticity of floor-space demand at −0.24, with a 60% pass-through to buyers; landowners and developers each capture roughly half of the remainder. We also confirm that housing supply in France is price-inelastic (elasticity of 0.35). |
| Keywords: | VAT, Housing, price-elasticities |
| JEL: | H22 R31 D61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ema:worpap:2026-11 |
| By: | Pascal Belan; Djob Li Ngue Bikob (CY Cergy Paris Université, THEMA) |
| Abstract: | We study intergenerational and intragenerational redistribution in an overlappinggenerations economy with monopolistic competition, in which workers differ in skill and firms pay a fixed entry cost in physical capital. This capital-based fixed cost implies that greater market power raises the equilibrium real interest rate by lowering wages and aggregate saving. We characterize Pareto-efficient steady states and show that productive and dynamic efficiency require correcting the markup distortion and attaining the Golden Rule. Because skill is unobservable, however, the available fiscal instruments cannot in general decentralize an arbitrary distribution along the Pareto frontier, and financing the Pigouvian subsidy may widen wage and consumption inequality. At the second best, the capital correction remains efficient. With homogeneous time preferences, this implies the Golden Rule and leaves labor taxation as the main intragenerational redistributive instrument. With heterogeneous patience, capital policy acquires a redistributive role and the optimal allocation may depart from the Golden Rule. |
| Keywords: | monopolistic competition, overlapping generations, optimal taxation, skill heterogeneity |
| JEL: | D43 E13 H21 O41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ema:worpap:2026-10 |
| By: | Dray, Sacha; Landais, Camille; Stantcheva, Stefanie |
| Abstract: | We study the history and geography of wealth accumulation in the United States using newly collected historical property tax records from the early 1800s onward. These records come from the administration of the General Property Tax–a tax that aspired to cover all types of property. We construct wealth series at the state, county, and national levels. At the state level, we use annual assessed values of wealth from state-level reports drawn from multiple sources. Because assessed values may differ from market values, we also require assessment ratios, defined as the ratio of assessed to market wealth. We obtain state-level assessment ratios from decadal U.S. Census wealth data (drawn from various Census reports, including those on “Wealth, Debt, and Taxation”), in which the Census carried out detailed valuation work, complemented with information on changes in assessment practices from the state reports, to build higher-frequency series of assessment ratios. The result is long-run annual wealth series for states from 1850 (or earlier, depending on the state) to 1935. We obtain national wealth series by aggregating these state series. At the county level, we use assessed values (or market values where available) from the U.S. Census wealth data for each decade, and apply either state-level or county-level assessment ratios, where available, to obtain market values of wealth for each decade from 1850 to 1930. We use these data to show, first, that the United States experienced extraordinary wealth accumulation after the Civil War and until the Great Depression. Second, spatial inequality in the United States has been large and highly persistent since the mid- 1800s. We also examine the determinants of long-term wealth growth and find, among other results, that counties with a higher share of enslaved property before the Civil War or with higher wealth inequality experienced lower subsequent long-run wealth growth. |
| Keywords: | taxation;wealth tax;wealth;inequality;convergence;property tax |
| JEL: | J1 |
| Date: | 2026–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138239 |