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on Public Finance |
| By: | Kinam Kim (Ministry of Health and Welfare, Republic of Korea); Peter J. Lambert (University of Oregon Economics Department) |
| Abstract: | In this study we derive measures of the redistributive effect of taxes and welfare expenditures for the U.S. using CPS data for the years 1994, 1999 and 2004. We find that whilst income inequality increased, the redistributive effect of taxes and public transfers together reduced market income inequality by approximately 30 percent. In 2004, 88 percent of the net redistributive effect resulted from public transfers and 12 percent from taxes. The total redistributive effect would have improved by 35 percent in 2004 if, all else equal, horizontal inequities in taxes and public transfers could have been eliminated. |
| Keywords: | Redistributive effect; Direct taxes; Public transfers; Inequality |
| JEL: | D63 H23 |
| Date: | 2007–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:ore:uoecwp:2007-3&r=pub |
| By: | Kind, Hans Jarle (Dept. of Economics, Norwegian School of Economics and Business Administration); Koethenbuerger, Marko (Center for Economic Studies, Ludwig-Maximilians-Universität); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) |
| Abstract: | Two-sided platform firms serve distinct customer groups that are connected through interdependent demand, and include major businesses such as the media industry, banking, and the software industry. A well known textbook result in one-sided markets is that a government may increase a monopolist’s output and reduce the deadweight loss by subsidizing output. The present paper shows that this result need not hold in a two-sided market. On the contrary, a higher advalorem tax rate - rather than a subsidy - could increase output and enhance welfare. |
| Keywords: | Two-sided markets; ad-valorem taxes; specific taxes; imperfect competition; industrial organization |
| JEL: | D40 D43 H21 H22 L13 |
| Date: | 2007–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2007_003&r=pub |
| By: | Jean, HINDRIKS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Susana, PERALTA (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)); Sholmo, WEBER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Center for Operations Research and Econometrics (CORE)) |
| Abstract: | The paper considers a model of a federation with two heterogeneous regions that try to attract the capital by competing in capital income taxes and public investment that enhance the productivity of capital. The regionsÕ choices determine the allocation of capital across the regions and their revenues under a tax sharing scheme. This framework allows for the examination of different approaches to fiscal equalization schemes (Boadway and Flatters, 1982, and Weingast, 2006). We show that tax competition distorts (downwards) public investments and that the equalization grants discourage public investments with a little effect on equilibrium taxes. However, the equalization schemes remain beneficial for the federation and, provided that the degree of asymmetry is small, for each region as well. |
| Keywords: | Heterogeneous Regions, Fiscal Federalism, Fiscal equalization, Public Investments |
| JEL: | C72 H23 H70 |
| Date: | 2006–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2006062&r=pub |
| By: | John Creedy; Norman Gemmell |
| Abstract: | This paper examines the built-in flexibility properties — as measured by the elasticity of revenue with respect to profits — of the UK corporation tax system. Emphasis is placed on determining some of the major influences on the extent to which total corporation tax revenue changes when profits change over the economic cycle. A microsimulation model, CorpSim, is constructed and used to obtain numerical results. In the model, corporations use group relief, capital allowances and losses in a tax-minimising manner. The growth of aggregate corporation tax revenue in practice in the UK appears to be highly volatile in relation to the growth of profits. High volatility in revenue elasticities is found to be especially associated with economic downturns. In mild economic downturns, corporation tax revenue elasticities may rise (because tax growth falls less than profit growth), but in more severe downturns, large but temporary decreases in revenue elasticities (and even negative elasticities) can be expected. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:mlb:wpaper:984&r=pub |
| By: | Kind, Hans Jarle (Dept. of Economics, Norwegian School of Economics and Business Administration); Schjelderup, Guttorm (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Stähler, Frank (Dept. of Economics, University of Otago) |
| Abstract: | Newspapers are two-sided platforms that sell their product both to readers and advertisers. Media firms in general, and newspapers in particular, are considered important providers of information, culture and language in most countries. Newspapers are therefore given preferential tax treatment. We show that lower ad valorem taxes lead newspapers to become more differentiated. Thereby the competitive pressure falls, possibly resulting in higher newspaper prices and reduced quality investments. |
| Keywords: | Two-sided markets; ad-valorem taxes |
| JEL: | D40 D43 H21 H22 L13 |
| Date: | 2007–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2007_005&r=pub |
| By: | Boeters, Stefan; Böhringer, Christoph; Büttner, Thiess; Kraus, Margit |
| Abstract: | In the tax policy debate, differentiation of value-added taxes is often justified by distributional concerns. Our quantitative analysis for Germany indicates that such concerns are misplaced. We find that the abolition of VAT differentiation has only negligible redistributive effects. Instead, reduced VAT are found to act as industry-specific subsidies. Whereas the overall welfare effects of pure VAT reforms are very small, a revenue-neutral introduction of a harmonised VAT combined with reductions in the marginal income tax rates or social security contributions turns out to produce substantial welfare gains for all households. |
| Keywords: | VAT, tax reforms, distribution, efficiency, applied general equilibrium |
| JEL: | D58 H22 H24 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:4614&r=pub |
| By: | Graziella Bertocchi (Università di Modena e Reggio Emilia, CEPR, CHILD and IZA) |
| Abstract: | Several countries have recently abolished or significantly reduced their taxes on bequests. Bequest taxes, on the other hand, were among the first to be introduced when modern systems of taxation were developed at the end of the nineteenth century. We propose an explanation for these facts which is based on a dynamic political economy model where redistribution is determined not only by wealth inequality but also by sectoral reallocation from agriculture to manufacturing. The model shows that the dynamics of capital accumulation induce a reduction of wealth inequality, which is further accelerated by the redistributive impact of the bequest tax. Through a standard politico-economic mechanism, wealth equalization pushes toward a reduced role of the bequest tax. At the same time, however, a second mechanism is at work, with structural reallocation from agriculture to manufacturing shifting the tax base from hard-to-avoid taxes on land toward easy-to-avoid taxes on capital. The differential treatment of land and capital introduces a source of asymmetry in the tax system which interferes with the determination of the dynamic political equilibrium of the model. Its effect is to compress bequest taxation but also to delay its gradual reduction due to declining wealth inequality. A number of extensions to the basic model allow to match our theory with the long-term evolution of bequest taxation in modern democracies and with the drastic discrepancies currently observed between tax systems in developed and underdeveloped countries. |
| Keywords: | bequest tax, inequality, structural reallocation, redistribution, voting |
| JEL: | H20 P16 N40 O40 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp2578&r=pub |