nep-pub New Economics Papers
on Public Finance
Issue of 2006‒02‒12
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Dynamic Theory of Public Spending, Taxation and Debt By Marco Battaglini; Steve Coate
  2. Is There a Social Security Tax Wedge? By Alessandro Cigno
  3. Redistributive Taxation Under Ethical Behaviour By Robin Boadway; Nicolas Marceau; Steeve Mongrain

  1. By: Marco Battaglini; Steve Coate
    Date: 2006–01–28
  2. By: Alessandro Cigno (University of Florence, CESifo, CHILD and IZA Bonn)
    Abstract: A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bismarckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to offset each other. The distortion may even change sign (the wedge may become a premium). In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian, than if it is Beveridgean.
    Keywords: tax wedge, Bismarck, Beveridge, public pensions, implicit pension tax, labour
    JEL: H31 H55 J38
    Date: 2006–02
  3. By: Robin Boadway; Nicolas Marceau; Steeve Mongrain
    Abstract: We consider the implications of ethical behaviour on the effect of a redistributive tax-transfer system. In choosing their labour supplies, individuals take into account whether their tax liabilities correspond to what they view as ethically acceptable. If tax liabilities are viewed as ethically acceptable, a taxpayer behaves ethically, does not distort her behaviour, and chooses to work as if she were not taxed. On the other hand, if ethical behaviour results in tax liabilities that exceed those that are ethically acceptable, she behaves egoistically (partially or fully), distorts her behaviour, and chooses her labour supply taking into account the income tax. We establish taxpayers' equilibrium behaviour and obtain that labour supply is less elastic when taxpayers may behave ethically than when they act egoistically. We characterize and compare the egoistic voting equilibrium linear tax schedules under potentially ethical and egoistic behaviour. We also compare our results to those obtained under altruism, an alternative benchmark.
    Keywords: Ethical behaviour, Kantian preferences, income taxation, redistribution
    JEL: H24 H21 Z13
    Date: 2006

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