nep-pub New Economics Papers
on Public Finance
Issue of 2008‒04‒15
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Outsourcing and Optimal Nonlinear Taxation: A Note By Aronsson, Thomas; Koskela, Erkki
  2. Fiscal Policy Effects on Economic Growth: Short Run vs Long Run By Kalle Kukk
  3. Tax Policy for Venture Capital Backed Entrepreneurship By Christian Keuschnigg
  4. Intergenerational public and private sector redistribution in Sweden 2003 By Forsell, Charlotte; Hallberg, Daniel; Lindh, Thomas; Öberg, Gustav

  1. By: Aronsson, Thomas (Department of Economics, Umeå University); Koskela, Erkki (Department of Economics)
    Abstract: This paper addresses outsourcing in the two-type optimal income tax model. If the government is able to control outsourcing via a direct tax instrument, outsourcing will not affect the marginal income tax structure. In the absence of a direct tax instrument, and under the plausible assumption that higher outsourcing increases the wage differential, the government will implement a lower marginal income tax rate for the low-ability type and a higher marginal income tax rate for the high-ability type than it would otherwise have done.
    Keywords: outsourcing; optimal nonlinear taxation
    JEL: H21 H25 J31 J62
    Date: 2008–04–03
  2. By: Kalle Kukk (Department of Economics, Tallinn University of Technology)
    Abstract: There are two important aspects to take into account while analysing fiscal policy effects on economic growth. First, it should be made clear whether Keynesian short-run or classical long-run effects are the object of interest. Second, the relations between different fiscal and macroeconomic variables should be identified – all possible simultaneous changes in other fiscal and macroeconomic indicators should be taken account of while analysing the effect of any fiscal policy decision on economic growth. As demonstrated in this article, Keynesian principles do not seem to hold as fiscal policy cannot have any remarkable impact on economy in a short run. But it is confirmed that in the long run, expansionary fiscal policies are not beneficial to the economy generally. For a government it is essential to recognise that changes in different revenue and expenditure categories may have the same impact on budget balance and on total government revenue and expenditure but they have different effects on economic growth in the long run. For example, fiscal policy decisions have different effects depending on whether to save increased revenue, to spend it for current expenditure or to use it for public investment.
    Keywords: fiscal policy, economic growth, budget deficit, government revenue, government expenditure, taxes
    JEL: H1 H2 H5 H6 E1 O4
    Date: 2007
  3. By: Christian Keuschnigg
    Abstract: Venture capital has become an important source of financing young entrepreneurial firms. Venture capital backed firms are often perceived as more innovative and as creating more value than others. Perhaps for this reason, policy makers are keen to create a good institutional framework to facilitate the development of an active venture capital industry. We explore the role of tax policy in determining the incentives of individuals to start up new firms and of venture capitalists to finance and advise them. In particular, we examine how business taxation at the company and investor level together with start-up capital subsidies affect the volume and quality of venture capital backed entrepreneurship.
    Keywords: Entrepreneurship, venture capital, taxes, subsidies
    JEL: D82 G24 H24 H25
    Date: 2008–03
  4. By: Forsell, Charlotte (Institute for Futures Studies); Hallberg, Daniel (Institute for Futures Studies); Lindh, Thomas (Institute for Futures Studies); Öberg, Gustav (Institute for Futures Studies)
    Abstract: We describe intergenerational redistribution in Sweden the year 2003. The high Swedish tax ratio of around 50-60 percent of GDP per capita is partly explained by every individual getting a lot back in terms of transfers and part in government consumption. Another reason is that most transfers are taxed, which results in double counting some tax payments. Here we attempt to correct the age profile of net tax payment for these effects and compare these to the gross profiles. On a per capita basis we find, using this netting, that the mean age of tax payers drops from 55 to 48 and that the taxes paid falls by 23.2 percent. We also look at age profiles of private and public consumption, and net private consumption, i.e., the difference between private disposable income and private consumption. We find that private net redistribution flows mainly from middle and old age to young ages, while net public transfers flow to both young and old.
    Keywords: Intergenerational; redistribution
    JEL: H23 J10
    Date: 2008–03

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