nep-pub New Economics Papers
on Public Finance
Issue of 2009‒04‒18
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A New Approach to Estimating Tax Interactions in Fiscal Federalism By Kazuko Miyamoto
  2. The Efficiency Cost of Child Tax Benefits By Kevin J. Mumford
  3. Patriotism, Taxation and International Mobility By Qari, Salmai; Konrad, Kai A.; Geys, Benny
  4. The Rise in Female Employment and the Role of Tax Incentives. An Empirical Analysis of the Swedish Individual Tax Reform of 1971 By Selin, Håkan

  1. By: Kazuko Miyamoto
    Abstract: The purpose of this paper is to propose a new approach to empirically analyze the existence of strategic interactions of taxation between state governments (horizontal) and between state and federal governments (vertical) using gasoline and cigarette taxation in the U.S. I explicitly estimate the structural parameters of consumer's utility and state governmentfs objective functions. The slopes of the reaction functions, which represent the strategic interactions of state government taxation policies, are then computed given the estimated structural parameters. Empirical results show that contrary to the existing literature, there is very little horizontal tax interaction in both the gasoline and cigarette cases. On the other hand, there is a moderate positive vertical tax interaction for both gasoline and cigarette taxes and the scale is larger in the case of cigarette taxes. Furthermore, the value and sign of the slopes of the reaction function are very different across states. This suggests a new policy implication: as state governments respond differently to federal government fiscal policy, uniform fiscal policy is not appropriate for welfare maximization of the nation.
    Keywords: tax interaction, cross border shopping
    JEL: H11 H21 H71 H73 H77
    Date: 2009–03
  2. By: Kevin J. Mumford
    Abstract: Families with children receive preferential treatment in the U.S. federal income tax. Over the past 15 years, the real value of child tax benefits approximately doubled reaching nearly $1,900 per child in 2006. This paper examines the efficiency cost of providing child tax benefits. A representative agent model is used to show how the efficiency cost of providing child tax benefits depends on labor supply and fertility elasticities. The model reveals that cross-price substitution effect for labor supply and children is of primary importance in calculating the efficiency cost. However, there are no estimates of this parameter in the literature. This paper uses data from the National Longitudinal Survey of Youth (NLSY) to estimate this parameter. The estimated cross-price substitution effect implies that children and time spent outside of employment are complements. This implies that the full cost of providing child tax benefits is larger than the reported tax expenditure.
    Keywords: fertility, income tax, child tax benefits, female labor supply
    JEL: H24 H21 J13
    Date: 2008–11
  3. By: Qari, Salmai (WZB - Social Science Research Center Berlin); Konrad, Kai A. (WZB - Social Science Research Center Berlin); Geys, Benny (WZB - Social Science Research Center Berlin)
    Abstract: For patriotic citizens, living in their native country is intrinsically preferable compared to living in the diaspora. In this paper, we analyze the implications of such a patriotic lock-in in a world with international migration and redistributive taxation. In a formal model of redistribution with international migration and fiscal competition we derive the main hypothesis: that countries with a more patriotic population should have higher redistributive taxes. Using ISSP survey data and combining them with OECD taxation data, we find robust evidence suggesting that a) higher patriotism is associated with higher tax burdens, and b) this relation is stronger for the upper-middle range of the income distribution.
    Keywords: patriotism, international mobility, taxation, redistribution, fiscal competition
    JEL: H20 H73
    Date: 2009–04
  4. By: Selin, Håkan (Department of Economics)
    Abstract: Sweden reached the 2007 OECD average level of female labor force participation already in 1974. Before, but not after, 1971 the average tax rate facing the housewife was a function of the income of her husband. By exploiting a rich register based data source I utilize the exogenous variation provided by the individual tax reform to analyze the evolution of female employment in Sweden in the beginning of the 1970’s. Simulations suggest that employment among married women would have been 10 percentage points lower in 1975 if the 1969 statutory income tax system still had been in place in 1975.
    Keywords: Female labor supply; income tax reforms
    JEL: H24 J21
    Date: 2009–04–08

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