nep-pub New Economics Papers
on Public Finance
Issue of 2008‒05‒31
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The U.S. Earned Income Tax Credit, its Effects, and Possible Reforms By Bruce D. Meyer
  2. A Welfare and Pricing Analysis of Value Added Taxation in Postal Services By CREMER, Helmuth; DE DONDER, Philippe; DUDLEY, Paul; RODRIGUEZ, Frank
  3. Small Business Taxation By Judith Freedman; Claire Crawford

  1. By: Bruce D. Meyer
    Abstract: In this paper, I first summarize how the U.S. Earned Income Tax Credit (EITC) operates and describe the characteristics of recipients. I then discuss empirical work on the effects of the EITC on poverty and income distribution, and its effects on labor supply. Next, I discuss a few policy concerns about the EITC: possible negative effects on hours of work and marriage, and problems of compliance with the tax system. I then briefly discuss some possible reforms to the structure of the current EITC.
    Keywords: EITC, poverty
    Date: 2007–08
  2. By: CREMER, Helmuth; DE DONDER, Philippe; DUDLEY, Paul; RODRIGUEZ, Frank
    Date: 2008–03
  3. By: Judith Freedman (University of Oxford); Claire Crawford (Institute for Fiscal Studies)
    Abstract: This chapter considers the taxation of small, owner-managed businesses. It focuses on the difficulties created by treating employees, unincorporated and incorporated businesses differently for tax and social security purposes. The authors reject blanket tax incentives for small firms and differentiation between legal forms and concentrate on issues arising from opportunities created on incorporation for the conversion of income from labour into income from capital (taxed at a lower rate). Experience in the UK and elsewhere suggests that an approach that relies on defining a sub-category of small businesses will not produce a satisfactory solution. The chapter therefore examines methods of aligning the effective tax treatment of different legal forms: in particular it considers the advantages of combining a Rate of Return Allowance with an Allowance for Corporate Equity, so as to tax income above the normal return to capital at the same rate whether it is described as dividend, capital gain or salary.
    Keywords: Small business taxation, labour income taxation, social security, taxation of income from capital, incorporation, corporation tax, choice of legal form, rate of return allowance, allowance for corporate equity
    Date: 2008

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