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on Public Finance |
| By: | Hansson, Åsa (Department of Economics, Lund University) |
| Abstract: | Entrepreneurship is often credited with generating important positive economic externalities. For example, entrepreneurs are often credited for promoting innovation, discovering new markets, and serving as a mechanism for knowledge spillover. Governments increasingly view encouraging entrepreneurship as an important policy objective. Economists have long studied the determinants of entrepreneurship. Taxation has also been found to be important, in particular income taxes and capital taxes. One form of taxation that has not been considered so far, however, is the wealth tax. The wealth tax is likely to influence entrepreneurship negatively, by affecting the pool of capital available to start up businesses as well as reducing the net return to successful entrepreneurship. This paper illustrates the impact of a tax on wealth on entrepreneurship using a simple model of the choice between becoming an entrepreneur or an employee. Actual data is then used to crudely investigate whether the wealth tax indeed has a measurable effect on self-employment in OECD countries, using increasingly sophisticated techniques. A difference-in-difference type estimator using the abolishment of the wealth tax as a ”natural experiment” points to a consistent pattern of a perceptible, but small impact. |
| Keywords: | Entrepreneurship; wealth tax; difference-in-difference estimation |
| JEL: | H24 H31 J23 |
| Date: | 2005–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2005_043&r=pub |
| By: | Ronald G. Cummings; Jorge Martinez-Vazquez; Michael McKee; Benno Torgler |
| Abstract: | There is considerable evidence that enforcement efforts can increase tax compliance. However, there must be other forces at work because observed compliance levels cannot be fully explained by the level of enforcement actions typical of most tax authorities. Further, there are observed differences, not related to enforcement effort, in the levels of compliance across countries and cultures. To fully understand differences in compliance behavior across cultures one needs to understand differences in tax administration and citizen attitudes toward governments. The working hypothesis is that cross-cultural differences in behavior have foundations in these institutions. Tax compliance is a complex behavioral issue and its investigation requires the use of a variety of methods and data sources. Results from laboratory experiments conducted in different countries demonstrate that observed differences in tax compliance levels can be explained by differences in the fairness of tax administration, in the perceived fiscal exchange, and in the overall attitude towards the respective governments. These experimental results are shown to be robust by replicating them for the same countries using survey response measures of tax compliance. |
| JEL: | H20 C90 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2005-29&r=pub |
| By: | Sheikh Tareq Selim (Cardiff Business School) |
| Abstract: | This paper studies the Ramsey problem of optimal labor income taxation in a simple model economy which deviates from a first best representative agent economy in three important aspects, namely, flat rate second best tax, monopoly power in intermediate product market, and monopolistic wage setting. There are three key findings: (1) In order to correct for monopoly distortion the Ramsey tax prescription is to set the labor income tax rate lower than its competitive market analogue; (2) Government's optimal tax policy is independent of its fiscal treatment of distributed pure profits; and (3) For higher levels of monopoly distortions Ramsey policy is more desirable than the first best policy. The key analytical results are verified by a calibration which fits the model to the stylized facts of the US economy. |
| Keywords: | Optimal taxation; Monopoly power; Ramsey policy |
| JEL: | D42 E62 H21 H30 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2005/6&r=pub |
| By: | Davide Tondani (Dipartimento di Diritto, Economia e Finanza Internazionale) |
| Abstract: | This paper aims at discussing the main features of Spain’s tax system, its recent reforms and those underway. The current state of the main taxes, their future reforms are studied starting from 1975, when Spain shifted to democracy. Direct taxes, indirect taxes and social security contributions are compared with the European average, trying to focus on the major changes from 1975 to 1999. The structure of the main taxes is surveyed, showing the recent reforms and the differences with the previous system. The analysis goes on observing the evolution of the tax burden from 1975 to 1997, looking at progressivity of the tax system, at the redistributive implications. Moreover, in this paper we analyse the process of fiscal decentralisation and the tax wedge in corporate and labour taxation. Finally, after a brief overview of the macroeconomic and budget framework, the paper assesses the fiscal reforms that have taken place during 1990s. The aim of these reforms was a more neutrality of the tax system and a reduction of disincentives to labour force participation, in tandem with an offset increase in VAT rates. Actually, the main tax reforms guidelines are a further reducing of the tax burden on labour, a promotion of tax neutrality across saving instruments and corporate tax regimes, and an improvement of decentralisation. |
| Keywords: | Taxation – Spain - Tax reform |
| JEL: | H20 H24 H25 |
| Date: | 2005–11–03 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0511002&r=pub |