nep-pub New Economics Papers
on Public Finance
Issue of 2006‒09‒23
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Voting over Taxes: The Case of Tax Evasion By Traxler, Christian
  2. Capital gains taxation and house price fluctuations By Fuest, Clemens; Huber, Bernd; Nielsen, Søren Bo
  3. Early Retirement and Social Security: A Long Term Perspective By J. Ignacio Conde-Ruiz; Vincenzo Galasso; Paola Profeta

  1. By: Traxler, Christian
    Abstract: This paper studies majority voting on taxes when tax evasion is possible. We characterize the voting equilibrium where the agent with median taxed income is pivotal. Since the ranking of true incomes does not necessarily correspond to the ranking of taxed incomes, the decisive voter can differ from the median income receiver. In this case, we find unconventional patterns of redistribution, e.g. from the middle class to the poor and the rich. Furthermore, we show that majority voting can lead to an inefficiently low level of taxation despite a right-skewed income distribution. Hence, the classical over-provision result might turn around, once tax evasion is taken into account.
    Keywords: Majority Voting; Tax Evasion; Welfare Analysis; Redistribution
    JEL: H26 H72 D6
    Date: 2006–09
  2. By: Fuest, Clemens (Department of Economics, Copenhagen Business School); Huber, Bernd (Department of Economics, Copenhagen Business School); Nielsen, Søren Bo (Department of Economics, Copenhagen Business School)
    Abstract: Recent years have seen large swings in house prices in many countries. Motivated by housing price variations, proposals for taxing capital gains on housing have repeatedly been put forth. The idea seems to be that such taxes would curb the redistribution occurring between those owning houses and those trying to get into the market for owner-occupied housing. Our paper shows that at least in simple settings, a tax on real capital gains on housing will only lead to even bigger price swings and will not be able to redistribute between people appearing on either side of the housing market.
    Keywords: capital gains tax; housing market; price fluctuations
    JEL: H23 H24 R31
    Date: 2006–09–12
  3. By: J. Ignacio Conde-Ruiz (Spanish Prime Minister's Economic Bureau and FEDEA); Vincenzo Galasso (IGIER, Università Bocconi, CSEF and CEPR); Paola Profeta (Università Bocconi)
    Abstract: We provide a long term perspective on the individual retirement behavior and on the future of retirement. In a Markovian political economic theoretical framework, in which incentives to retire early are embedded, we derive a political equilibrium with positive social security contribution rates and early retirement. While aging has opposite economic and political effects on social security contributions, it may lead to postponing retirement -- by reducing the generosity of pension benefits -- unless the political effect leads to a large increase in contribution and hence higher benefits. Economic slowdowns, captured by a reduction in wage income in youth, will also induce workers to postpone retirement and to vote for less social security
    Keywords: pensions, income effect, tax burden, politico-economic Markovian equilibrium
    JEL: H53 H55 D72
    Date: 2006–09–01

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