nep-pub New Economics Papers
on Public Finance
Issue of 2005‒10‒22
eleven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. U.S. Tax Reform: An Overview of the Current Debate and Policy Options By Thomas Dalsgaard
  2. Capital Income Taxation and Economic Growth in Open Economies By Geremia Palomba
  3. Personal Income Tax Reform: Concepts, Issues, and Comparative Country Developments By Howell H. Zee
  4. A New Approach to Taxing Financial Intermediation Services Under a Value Added Tax By Howell H. Zee
  5. Tax Competition in EU implies EMTR different: some effects on FDI and Economic Growth Rate By Maria Rosaria Alfano
  6. Taxation Reforms and Changes in Revenue Assignments in China By Ben Lockwood; Ehtisham Ahmad; Raju Singh
  7. Slovakia's 2004 Tax and Welfare Reforms By David Moore
  8. The Russian Flat Tax Reform By Anna Ivanova; Alexander Klemm; Michael Keen
  9. Tax Systems under Fiscal Adjustment: A Dynamic CGE Analysis of the Brazilian Tax Reform By Victor Duarte Lledo
  10. Quantifying the Inefficiency of the US Social Insurance System By Mark Huggett (Georgetown University) and Juan Carlos Parra (Georgetown University)
  11. Pension Funds and Emerging Markets By Jorge A. Chan Lau

  1. By: Thomas Dalsgaard
    Abstract: In the context of the current tax policy debate in the United States, this paper reviews and discusses some of the main recurrent themes, as well as some of the most important tax reform proposals put forward over the past two decades. It finds that although there seems to be widespread agreement that the current tax system is too complex, unfair, and distortionary, little or no consensus exists on how best to improve it.
    Date: 2005–07–28
  2. By: Geremia Palomba
    Abstract: Do reductions in capital income taxes attract foreign capital and, at the same time, foster economic growth? This paper examines the effect of capital income taxation on the international allocation of capital and on economic growth in a two-country overlapping generations model with endogenous growth and internationally mobile capital. It shows that domestic capital taxes affect both the international allocation of capital and the rate of economic growth and that these two effects are not necessarily the same. A country can increase its share of the existing world capital by changing its taxes but, depending on the elasticity of saving to after-tax returns, this may reduce the rate of capital accumulation and economic growth.
    Keywords: Capital , Income taxes , Economic growth , Taxation , Economic models ,
    Date: 2004–06–15
  3. By: Howell H. Zee
    Abstract: This paper provides a largely nontechnical survey of concepts and issues related to the reform of the personal income tax, covering both base and rate aspects of the tax, as well as fundamental reform options. It also covers recent developments in selected OECD countries.
    Keywords: Tax reforms , OECD , Income taxes , Tax evasion ,
    Date: 2005–05–13
  4. By: Howell H. Zee
    Abstract: This paper contains a proposal (referred to as the "modified reverse-charging" approach) to tax financial intermediation services under a VAT. At the heart of the proposal is the application of a reverse charge that shifts the collection of the VAT on deposit interest from depositors to banks, in conjunction with the establishment of a franking mechanism managed by banks that effectively transfers the VAT so collected to borrowers as credits against the VAT on their loan interest on a transaction-by-transaction basis. The proposal is fully compatible with an invoice-credit VAT and is capable of delivering the correct theoretical result at minimal administrative costs.
    Keywords: Value added tax , Taxation , Financial systems ,
    Date: 2004–07–20
  5. By: Maria Rosaria Alfano
    Abstract: Tax base mobility in a globalised economy implies that tax policy influences savings, domestic investments and inter-jurisdictional capital mobility. Assuming the existence of spatial and temporal interdependence, using: a data set of EU countries, after the capital market liberalisation, and a longitudinal data technique for pooling time series of cross section; we test how difference in national tax influence capital inflows and outflows. More, using a cointegration analysis on GDP procapita and FDI time series’, we investigate the link between these two paths.
    Keywords: Tax Competition, FDI, Economic Growth, Cointegration analysis
    JEL: D6 D7 H
    Date: 2005–10–17
  6. By: Ben Lockwood; Ehtisham Ahmad; Raju Singh
    Abstract: The value-added tax (VAT) in China has the unusual feature that capital goods are included in the VAT base. In addition, most services are subject to the business tax, which is not creditable against VAT, but which accrues to local governments, and operates as a turnover tax. On grounds of economic efficiency, it would be desirable to eliminate these distortions so that domestic producers are not increasingly placed at a disadvantage as China dismantles tariff and nontariff barriers on competing goods. Reforming indirect taxation would however generate considerable revenue losses for local governments and, in the absence of any compensatory mechanisms, there would be significant impediments to the needed reforms. This paper focuses on the extent of revenue losses, their distribution across provinces, and possible options for compensation.
    Keywords: Fiscal policy , China , Indirect taxation , Value added tax , Tax reforms ,
    Date: 2004–07–29
  7. By: David Moore
    Abstract: The paper reviews Slovakia's comprehensive reforms to its taxation and welfare systems in 2004, including the introduction of a flat-rate income tax and single-rate value-added tax (VAT), and linkage of social benefits to participation in labor market programs. Though revenues following the reform are lower as a ratio to GDP, the paper argues that the reforms have helped encourage investment and improved efficiency by broadening the tax base, reducing the administrative burden, and improving work incentives. The paper also looks at some implications of the reforms for income distribution and social protection.
    Keywords: Tax reforms , Slovak Republic , Income taxes , Value added tax ,
    Date: 2005–07–14
  8. By: Anna Ivanova; Alexander Klemm; Michael Keen
    Abstract: Russia dramatically reduced its higher rates of personal income tax (PIT) in 2001 establishing a single marginal rate at the low level of 13 percent. In the following year, real revenue from the PIT actually increased by about 26 percent. This 'flat tax' experience has attracted much attention (and emulation) among policymakers, making it perhaps the most important tax reform of recent years. But it has been little studied. This paper asks whether the strong revenue performance of the PIT was itself a consequence of this reform, using both macro evidence and, in particular, micro-level data on the experiences of individuals and households affected by the reform to varying degrees. It concludes that there is no evidence of a strong supply side effect of the reform. Compliance, however, did improve quite substantially-by about one third according to our estimates-though it remains unclear whether this was due to the parametric reforms or to accompanying changes in enforcement.
    Keywords: Tax reforms , Russian Federation , Income taxes , Tax evasion ,
    Date: 2005–02–03
  9. By: Victor Duarte Lledo
    Abstract: This paper uses a dynamic computable general equilibrium model (CGE) to analyze the macroeconomic and redistributive effects of replacing turnover and financial transaction taxes in Brazil by a consumption tax. In order to approximate Brazil's compliance with its fiscal adjustment targets, the proposed reform is subject to a non increasing path for the level of public debt. Despite an increase in the average consumption tax rate in the first years after the reform, a majority of individuals experienced an increase in their lifetime welfare. This result rejects the hypothesis that the on-going fiscal adjustment effort carried on by the Brazilian government was an obstacle to the implementation of a more efficient tax system.
    Keywords: Tax reforms , Brazil , Fiscal reforms , Economic models ,
    Date: 2005–08–01
  10. By: Mark Huggett (Georgetown University) and Juan Carlos Parra (Georgetown University) (Department of Economics, Georgetown University)
    Abstract: How far is the US social insurance system from an efficient system? We answer this question within a model where agents receive idiosyncratic, labor-productivity shocks that are privately observed. When social security and income taxation comprise the social insurance system, the maximum possible efficiency gain is equivalent to a 10.5 percent increase in consumption. This occurs when labor productivity differences are set to the permanent differences estimated in US data. Classification-JEL Codes: D80, D90, E21
    Keywords: Social Security, Idiosyncratic Shocks, Efficient Allocations, Private Information
  11. By: Jorge A. Chan Lau
    Abstract: This paper focuses on the investment behavior of pension funds in developed and emerging market countries. First, it analyzes the main determinants of the emerging market asset allocation of pension funds in developed countries. Second, it assesses how pension funds in emerging markets have contributed to the development of local securities markets. Third, it analyzes the determinants of pension funds' investment performance. The paper concludes with a discussion of why the emerging market asset allocation of pension funds in developed countries is likely to increase and what the challenges faced by pension funds in emerging markets are.
    Keywords: Pensions , Emerging markets , Financial assets , Pension regulations ,
    Date: 2004–10–12

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