nep-pub New Economics Papers
on Public Finance
Issue of 2005‒12‒14
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Corrective Ad Valorem and Unit Taxes : A Welfare Comparison By Susanne Dröge; Philipp J. H. Schröder
  2. Top Incomes and Top Taxes in Germany By Stefan Bach; Giacomo Corneo; Viktor Steiner
  3. Optimal Nonlinear Taxation of Income and Savings in a Two Class Economy By Craig Brett; John A. Weymark
  4. Redistributive effect and progressivity of taxes An International Comparison across the EU using EUROMOD By Verbist G
  5. Modelling the Redistributive Impact of Indirect Taxes in Europe: an Application of Euromod By O'Donoghue C; Baldini M; Mantovani D
  6. Average and marginal effective tax Rates facing workers in the eu. A Micro-level analysis of levels, Distributions and driving factors (revised version of EM2/02) By Immervoll H
  7. Household incomes and redistribution in the European Union: quantifying the equalising properties of taxes and benefits By Immervoll H; Levy H; Lietz C; Mantovani D; O'Donoghue C; Sutherland H; Verbist G

  1. By: Susanne Dröge; Philipp J. H. Schröder
  2. By: Stefan Bach; Giacomo Corneo; Viktor Steiner
  3. By: Craig Brett (Department of Economics, Mount Allison University); John A. Weymark (Department of Economics, Vanderbilt University)
    Abstract: Optimal nonlinear taxation of income and savings is considered in a two-period model with two individuals who only differ in their skill levels. When the government can commit to its second period policy, taxes on savings do not form part of the optimal tax mix. When commitment is not possible, the optimal tax scheme distorts private savings behavior. If the types are separated in period one, the savings of the low- (resp. high-) skilled individual are subsidized (resp. taxed) so as to relax an incentive compatibility constraint. If the types are pooled in period one, it is optimal for at least one type to have savings distorted, with the high-skilled individual facing a lower marginal tax rate on savings than the low-skilled individual.
    Keywords: Asymmetric information, commitment, optimal income taxation, savings taxation, time consistency
    JEL: D82 H21
    Date: 2005–11
  4. By: Verbist G
    Abstract: This paper gives an international comparison of the redistributive effect of personal income taxes in the 15 countries of the EU, using the European tax-benefit model EUROMOD. We focus on the effect of personal income taxes, social insurance contributions and other direct taxes. We present the contribution of progressivity and average tax rate to the reduction of income inequality, as well as the weight of the various types of tax concessions (i.e. exemptions, deductions, allowances and credits). There appears to be a wide variety among countries in the level of inequality reduction as well as in the instruments used to achieve this reduction. Personal income taxes are in all countries the most important source for inequality reduction, which is to a large extent, though not solely, due to the progressive rate schedule. Countries with a high degree of pre-tax inequality do not systematically redistribute more through their taxes; the results indicate rather the opposite.
    Keywords: income redistribution; income taxes; social insurance contributions; microsimulation; European Union
    JEL: C81 D31 H23 H24
    Date: 2004–10
  5. By: O'Donoghue C; Baldini M; Mantovani D
    Abstract: This paper describes a model to simulate expenditure and indirect taxes in 12 EU countries within the EUROMOD tax-benefit model. The paper outlines the types of indirect taxes in the countries examined. Validation checks are made on the effectiveness of the expenditure models used. The redistributive effect of indirect taxes is decomposed into the tax resulting from different commodity groups. Lastly the progressivity and redistributive effect of indirect taxes are examined and compared with income taxes, social insurance contributions (employee and employer) and the main social benefit groupings with all EU countries.
    Keywords: European Union; Microsimulation; Taxation, Redistribution.
    JEL: C81 D31
    Date: 2004–06
  6. By: Immervoll H
    Abstract: Macro-based effective tax rate (ETR) measures do not provide information on the level or distribution of marginal effective tax rates thought to influence household behaviour. They also do not capture differences in average ETRs facing different population sub-groups. I use EUROMOD, an EU-wide tax-benefit model, to derive distributions of average and marginal ETR measures for fourteen countries. Results for each country show how many and which types of individuals face different ETR levels. I consider effective tax burdens on labour income as well as the marginal tax rates faced by working men and women. Results are broken down to isolate the influence of income taxes, social contributions and various types of social benefits.
    Keywords: Effective Tax Rates; European Union; Microsimulation.
    JEL: H22 D31 C81
    Date: 2004–10
  7. By: Immervoll H; Levy H (Institute for Social & Economic Research); Lietz C; Mantovani D; O'Donoghue C; Sutherland H (Institute for Social & Economic Research); Verbist G
    Abstract: The systems of direct taxes and cash benefits in the Member States of the European Union vary considerably in size and structure. We explore their direct impacts on cross-sectional income inequality (termed "redistributive effect" for the purpose of this paper) using EUROMOD, a tax-benefit microsimulation model for the European Union. This relies on harmonised household micro-data representative of each national population together with simulations of entitlements to cash benefits and liabilities for taxes and social contributions. It allows us to draw a more comprehensive - and comparable - picture of the combined effects of transfers and taxes than is usually possible. We decompose the redistributive effect of tax-benefit systems to assess and compare the effectiveness of individual policies at reducing income disparities. The following categories of benefits and taxes are considered both individually and in combination: income taxes, social contributions, cash benefits designed to target the poor or redistribute inter-personally (through means-testing) as well as cash benefits intended to redistribute intra-personally across the lifecycle (through social insurance or contingency-based entitlement). We derive results for the 15 "old" members of the European Union and present them for each country separately as well as for the EU-15 as a whole. JEL: C81, D31, H22, H55 Keywords: Income inequality, Redistribution, Microsimulation, European Union
    Keywords: Income inequality, Redistribution, Microsimulation, European Union
    JEL: C81 D31 H22 H55
    Date: 2005–07

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