nep-pub New Economics Papers
on Public Finance
Issue of 2005‒04‒03
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Taxation, Reranking and Equivalence Scales By Justin van de Ven; John Creedy
  2. The Interaction of Tax Exemptions and Individual Tax Reform Preferences By Salvatore Barbaro; Jens Südekum
  3. Pension Incomes in the European Union: Policy Reform Strategies in Comparative Perspective By Daniela Mantovani; Fotis Papadopoulos; Holly Sutherland; Panos Tsakloglou
  4. Union Strategy and Optimal Income Taxation By Sebastian G. Kessing; Kai A. Konrad

  1. By: Justin van de Ven; John Creedy
    Abstract: This paper considers whether an equivalence scale implicit in transfer policy can be inferred from summary measures of reranking. It is conjectured that, if the government has a distributional objective and formulates tax policy with a view to equitable treatment of income units, then adopting the scale that is implicit in government transfer policy should only identify reranking that has no equity foundation. This motivates the question: Is the incidence of reranking associated with a transfer system minimised by the equivalence scale that is implicit in the transfer system? The analysis presented in this paper suggests that the equivalence scale which minimises reranking, while not necessarily equal to the closest approximation to the one that is implicit in transfer policy, is nevertheless in its vicinity
    Date: 2004–01
  2. By: Salvatore Barbaro (University of Mainz); Jens Südekum (University of Konstanz and IZA Bonn)
    Abstract: The individual voting behavior on the abolishment of single income-tax exemptions crucially depends on how strongly agents are affected by other deduction possibilities that are not at stake in the reform plans of the government. The interactions depend (i) on the shape of the tax schedule, and (ii) on how the government wants to use the revenue that is generated by the cut of tax privileges. If government plans to increase redistribution in form of lump-sum transfers, then the political chances of a tax reform increase with the existence of other deduction possibilities under progressive taxation. With proportional taxation and a budgetenlargement policy, the voting decision depends only on the particular tax privileges at stake. Matters are different if the government wants to adopt a revenue-neutral tax-cut-cum-basebroadening policy. Except for strong progression, it is less likely that an agent supports the elimination of tax privileges the stronger she is affected by other exemptions in the back.
    Keywords: income tax reform, public choice
    JEL: D72 D74
    Date: 2005–03
  3. By: Daniela Mantovani (University of Cambridge and Prometeia); Fotis Papadopoulos (Athens University of Economics and Business); Holly Sutherland (ISER, University of Essex); Panos Tsakloglou (Athens University of Economics and Business and IZA Bonn)
    Abstract: This paper considers the effects on current pensioner incomes of reforms designed to improve the long-term sustainability of public pension systems in the European Union. We use EUROMOD to simulate a set of common illustrative reforms for four countries selected on the basis of their diverse pension systems and patterns of poverty among the elderly: Denmark, Germany, Italy and the UK. The variations in fiscal and distributive effects on the one hand suggest that different paths for reform are necessary in order to achieve common objectives across countries, and on the other provide indications of the appropriate directions for reform in each case.
    Keywords: pensions, European Union, microsimulation
    JEL: C81 I30 H55
    Date: 2005–03
  4. By: Sebastian G. Kessing (Free University of Berlin); Kai A. Konrad (WZB, Free University of Berlin and IZA Bonn)
    Abstract: Restrictions on work hours are more important in countries with a large welfare state. We show that this empirical observation is consistent with the strategic effects of such restrictions in a welfare state in the context of optimal direct taxation in the tradition of Mirrlees (1971). Our results also apply to non-welfarist states which have income redistribution, but not in purely extortionary states.
    Keywords: optimal income taxation, labor unions, work hours
    JEL: H21 H23
    Date: 2005–03

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