New Economics Papers
on Public Finance
Issue of 2009‒01‒17
five papers chosen by

  1. When Kolm Meets Mirrless: ELIE By Alain Trannoy; Laurent Simula; Laurent Simula
  2. Reducing Current Taxes to Raise Future Revenue By Amihai Glazer
  3. Spending Versus Tax Cuts: Who Pays the Cost of Political Compromise? By Dean Baker
  4. Taxes in Latin America: Do wealth and inequality matter? By Bárbara Castelletti
  5. Is the Median Voter Decisive? Evidence of 'Ends Against the Middle' From Referenda Voting Patterns By Eric J. Brunner; Stephen L. Ross

  1. By: Alain Trannoy (Greqam-Idep, EHESS); Laurent Simula (National University of Singapore and IDEP); Laurent Simula (National University of Singapore and IDEP)
    Abstract: This article discusses the properties of Kolm’s ELIE proposal in the context of optimal income taxation `a la Mirrlees. It first shows that ELIE gives rise to non-standard type-dependent budget sets, which has important implications in terms of a minimum labour requirement. Second, it adopts the Mirrleesian framework to characterize ELIE as a first-best tax scheme and casts light on the very specific shape of the distribution of social weights that generate it. Third, it shows that ELIE is incentivecompatible only when both gross income and time worked are verifiable, which seems to be a strong assumption for a non-negligible number of taxpayers.
    Keywords: ELIE, Income Redistribution, Optimal Taxation, Incentive Compatibility.
    JEL: H21 H24 D63
    Date: 2007–11
  2. By: Amihai Glazer (Department of Economics, University of California-Irvine)
    Abstract: A government which raises taxes in the current period may induce workers to invest in finding ways to reduce their tax payments, and so may reduce the government's ability to raise revenue in the future. Therefore, a government that fears it may have to raise much revenue in the future may set taxes in the current period at a lower level than that which would maximize revenue, or that would maximize social welfare in that period.
    Keywords: Tax evasion; Intertemporal taxation
    JEL: H26 H60
    Date: 2008–12
  3. By: Dean Baker
    Abstract: President Obama and the Democratic leadership will undoubtedly have to make some political compromises in order to get a stimulus package through Congress. However, it is important to keep in mind that there will be real costs associated with these compromises insofar as they result in a less effective stimulus package. A less effective package will mean less economic growth, which will, in turn, mean that fewer people will have jobs.
    Keywords: economic crisis, economic stimulus, fiscal stimulus
    JEL: H H5 H6 H2
    Date: 2009–01
  4. By: Bárbara Castelletti
    Abstract: To meet pressing development challenges, Latin American states need fiscal resources. The good news is that in the last decade, favourable macroeconomic conditions and the design of better tax systems pushed up fiscal revenues in Latin America. Notably, tax revenues have increased by close to 1.8 per cent annually between 1990 and 2006, reflecting a widespread strengthening of taxes levied on income, profits and capital gains and general goods and services.
    Date: 2008–10
  5. By: Eric J. Brunner (Quinnipiac University); Stephen L. Ross (University of Connecticut)
    Abstract: This paper examines whether the voter with the median income is decisive in local spending decisions. Previous tests have relied on cross-sectional data while we make use of a pair of California referenda to estimate a first difference specification. The referenda proposed to lower the required vote share for passing local educational bonding initiatives from 67 to 50 percent and 67 to 55 percent, respectively. We find that voters rationally consider future public service decisions when deciding how to vote on voting rules, but the empirical evidence strongly suggests that an income percentile below the median is decisive for majority voting rules. This finding is consistent with high income voters with weak demand for public educational services voting with the poor against increases in public spending on education.
    Keywords: Median Voter Hypothesis, Voting, Referenda, Education Spending
    JEL: H4 H7 I2
    Date: 2009–01

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