nep-pub New Economics Papers
on Public Finance
Issue of 2005‒10‒08
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Tax Reform and Environmental Taxation By Gilbert E. Metcalf
  2. Tax Evasion and the Importance of Trust By Hammar, Henrik; Jagers, Sverker; Nordblom, Katarina
  3. Puzzling Tax Structures in Developing Countries: A Comparison of Two Alternative Explanations By Roger Gordon; Wei Li
  4. Personal Income Tax Reform and Revenue Potential in Transition By Zeljko Bogetic; Fareed Hassan

  1. By: Gilbert E. Metcalf
    Abstract: I measure the industry impacts of an environmental tax reform where a carbon tax is used to finance full or partial corporate tax integration. I find that the industry impacts of such a reform are likely to be modest (in the sense of impacts on returns on equity).
    JEL: H2 Q4 Q5
    Date: 2005–10
  2. By: Hammar, Henrik (Department of Economics, Göteborg University and National Institute of Economic Research (NIER)); Jagers, Sverker (Department of Political Science, Göteborg University); Nordblom, Katarina (Department of Economics, School of Business, Economics and Law)
    Abstract: Unless people pay the taxes they are obliged to pay, a general welfare state will eventually collapse. Thus, for the welfare state to survive in the long run, tax compliance is of utmost importance. Using Swedish individual survey data we analyze which factors affect the perception of tax evasion. The analysis is conducted on ten different taxes and the results differ widely. Hence, we show that it is important to study different taxes separately rather than treating tax evasion as one common phenomenon. In this paper we focus on the importance of different kinds of trust. Whether or not people in general are regarded as trustworthy only has a minor impact on perceived tax evasion. Instead, what matters is trust or distrust in politicians. People who distrust the parliament are more likely than others to think that tax evasion is common, and the result holds for most of the taxes studied. This may have severe long-run consequences for the welfare state. If people stop trusting their leading politicians, social norms about tax compliance deteriorate and the possibilities of collecting taxes for maintain- ing the welfare state are reduced. <p>
    Keywords: trust in politicians; generalized trust; social capital; general welfare state; tax policy; tax compliance
    JEL: H11 H26 Z13
    Date: 2005–09–27
  3. By: Roger Gordon; Wei Li
    Abstract: Observed economic policies in developing countries differ sharply both from those observed among developed countries and from those forecast by existing models of optimal policies. For example, developing countries rely little on broad-based taxes, and make substantial use of tariffs and seignorage as nontax sources of revenue. The objective of this paper is to contrast the implications of two models designed to explain such anomalous policies. One approach, by Gordon-Li (2005), focuses on the greater difficulties faced in poor countries in monitoring taxable activity, and explores the best available policies given such difficulties. The other, building on Grossman-Helpman (1994), presumes that political-economy problems in developing countries are worse, leading to worse policy choices. The paper compares the contrasting theoretical implications of the two models with the data, and finds that the political-economy approach does poorly in reconciling many aspects of the data with the theory. In contrast, the forecasts from Gordon-Li model are largely consistent with the data currently available.
    JEL: H21 O23 O17 F13 F23
    Date: 2005–10
  4. By: Zeljko Bogetic (The World Bank); Fareed Hassan
    Abstract: The paper uses the 1992 household survey for Bulgaria to show poor revenue performance of the income tax structure prevailing in 1992, which did not take into account the underlying distribution of income. The paper shows that Bulgaria can benefit from a much lower and simpler income tax rate structure, which will be superior on revenue and distributional grounds. Subsequently in the 1990s, Bulgaria implemented an income tax reform similar to the one advocated in this paper.
    Keywords: Income tax, tax reform, tax potential tax rate, tax base, income distribution, Bulgaria, transition
    JEL: D6 D7 H D1 D2 D3 D4 O P
    Date: 2005–10–05

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