nep-pub New Economics Papers
on Public Finance
Issue of 2005‒09‒29
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Commodity Taxation when Land and Structures must be Taxed at the Same Rate By Saku Aura; Thomas Davidoff
  2. Dual Income Taxation: Why and How? By Peter Birch Sørensen
  3. Optimal Taxation Policy in the Presence of Comprehensive Reference Externalities. By Constantin Gurdgiev;
  4. The International Spillover Effects of Pension Reform By Yvonne Adema; Lex Meijdam; Harrie A. A Verbon
  5. Public Pensions and Capital Accumulation: The Case of Brazil By Gerhard Glomm; Jürgen Jung; Changmin Lee; Chung Tran
  6. What's the monetary value of distributive justice? By Corneo, Giacomo; Fong, Christina
  7. Continuous versus Step-Level Public Good Games By Abele, S.; Stasser, G.

  1. By: Saku Aura; Thomas Davidoff
    Abstract: We show that the optimal property tax rate rises with the ratio of land rents to structure and land development costs. California’s high ratio of income to property tax revenue and the distribution of Federal housing subsidies thus appear geographically misplaced. Proportional taxation of non-housing commodities is not optimal, even when elasticities with respect to wages are identical. Absent externalities, the desirability of transportation taxes and “anti-sprawl” growth controls hinge on the relative importance of time versus money in commuting costs.
    JEL: H21 R13
    Date: 2005
  2. By: Peter Birch Sørensen (Department of Economics, University of Denmark)
    Abstract: The dual income tax combines a progressive tax schedule for labour income with a low flat tax rate on capital income and corporate income. This paper restates the case for the dual income tax and discusses alternative methods of taxing business income under such a tax system, paying special attention to the taxation of income from closely held corporations. It is argued that the imputed normal return to shares in unlisted companies should be taxed as capital income, while above-normal returns should be subject to labour income tax. The paper demonstrates that such a tax scheme can be designed to be neutral towards the firm’s investment and financing decisions and towards the decisions of shareholders to realize their shares.
    Keywords: dual income tax; tax neutrality; taxation of business income; shareholder income tax
    JEL: H24 H25
    Date: 2005–08
  3. By: Constantin Gurdgiev; (Department of Economics, Trinity College)
    Date: 2005–08
  4. By: Yvonne Adema; Lex Meijdam; Harrie A. A Verbon
    Abstract: This paper explores how pension reforms in countries with PAYG schemes affect countries with funded systems. We use a two-country two-period overlapping-generations model, where the countries only differ in their pension systems. We distinguish between the case where a reform potentially leads to a Pareto improvement in the PAYG country, and where this is impossible. In the latter case the funded country shares both in the costs and the benefits of the reform. However, if a Pareto-improving pension reform is feasible in the PAYG country, a Pareto improvement in the funded country is not guaranteed.
    Keywords: international spillover effects, pension reform
    JEL: F21 F41 F47 H55 H63
    Date: 2005
  5. By: Gerhard Glomm; Jürgen Jung; Changmin Lee; Chung Tran
    Abstract: We use an OLG model to study the effects of the generous public sector pension system in Brazil. In our model there are two types of workers, one working in the private sector, the other working in the public sector. Public workers produce infrastructure or education services. We find that reducing generosity of the public sector pensions has large effects on capital accumulation and steady state income.
    Keywords: pension reform, capital accumulation
    JEL: E62 H41 H55
    Date: 2005
  6. By: Corneo, Giacomo; Fong, Christina
    Abstract: This paper develops a simple theoretical model that can be implemented to estimate the willingness to pay for distributive justice. We derive a formula that allows one to recover the willingness to pay for distributive justice from the estimated coefficients of a probit regression and fiscal data. Using this formula and data from a 1998 Gallup Social Audit, we find that the monetary value of justice in the United States is about one fifth of GDP. We also generalize the model to estimate the value of justice for different types of people (e.g., Republicans, Democrats, urban dwellers, rural dwellers). We find no evidence that the value of justice varies across types of people. This is consistent with the idea that political differences between types are due to differences in the beliefs about the fairness of the market system, rather than differences in the values they place on distributive justice.
    Keywords: distributive justice; fairness; governmental redistribution
    JEL: D63 H24
    Date: 2005–09
  7. By: Abele, S.; Stasser, G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We will firstly outline the rationale of a public good game and explain the distinction between a continuous public good game and a threshold public good game. As a vast majority of experimental research in social psychology on public good games has used threshold public good games, we will then outline the structure of a dilemma game with a provision point. Our point is that dilemma games with a provision point violate two important assumptions commonly held for public good games: a) there is always a conflict between the group’s interest and the individual’s interest; and b) an individual is always better off defecting. A threshold dilemma game is a dilemma with a coordination game embedded in it. Hence it provides focal point solutions and may as a consequence leave less room for other factors to affect behavior. Moreover, games with a provision point might yield different results than games without a provision point. We will argue that above that threshold dilemma games do not provide good models of many the public goods problems that are encountered in real life. We will propose that a public good game with a tilted S function provides a more appropriate model of real life dilemmas while fulfilling the defining properties of public good games.
    Keywords: Step-level Public Good Game;Continuous Public Good Game;
    Date: 2005–04–03

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