nep-pub New Economics Papers
on Public Finance
Issue of 2010‒03‒06
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimum taxation of bequests in a model with initial wealth By Johann K. Brunner; Susanne Pech
  2. The Tax Exclusion for Employer-Sponsored Health Insurance By Jonathan Gruber
  3. Taxation and Market Power By Konrad, K.A.; Morath, F.; Müller, W.
  4. Second-Best Optimal Taxation of Oil and Capital in a Small Open Economy By Alberto Petrucci
  5. Optimal Emission Tax with Endogenous Location Choice of Duopolistic Firms By Masako Ikefuji; Jun-ichi Itaya; Makoto Okamura
  6. Should tax bases overlap in a federation with lobbying? By Alejandro Esteller-Moré; Umberto Galmarini; Leonzio Rizzo

  1. By: Johann K. Brunner; Susanne Pech
    Abstract: We formulate an optimum-taxation model, where parents leave bequests to their descendants for altruistic reasons. In contrast to the standard model, individuals differ not only in earning abilities, but also in initial (inherited) wealth. In this model a redistributive motive for an inheritance tax - which is equivalent to a uniform tax on all expenditures - arises, given that initial wealth increases with earning abilities. Its introduction increases intertemporal social welfare or has an ambiguous effect, depending on whether the bequeathing generation can adjust their behaviour and whether the external effect related to altruism is accounted for in the social objective.
    Date: 2010–01
  2. By: Jonathan Gruber
    Abstract: This paper reviews the issues around and impacts of the tax exclusion for employer-sponsored insurance. After reviewing the arguments for and against this policy, I present micro-simulation evidence on the federal revenue, insurance coverage, and distributional impacts of various reforms to the exclusion.
    JEL: H2 I1
    Date: 2010–02
  3. By: Konrad, K.A.; Morath, F.; Müller, W. (Tilburg University, Center for Economic Research)
    Abstract: We analyze the incidence and welfare e¤ects of unit sales taxes in experimental monopoly and Bertrand markets. We …nd, in line with economic theory, that …rms with no market power are able to shift a high share of a tax burden on to consumers, independent of whether buyers are automated or human players. In monopoly markets, a monopolist bears a large share of the burden of a tax increase. With human buyers, however, this share is smaller than with automated buyers as the presence of human buyers constrains the pricing behavior of a monopolist.
    Keywords: tax incidence;monopoly;Bertrand competition;experiment
    JEL: H22 L12 L13 C72 C92
    Date: 2010
  4. By: Alberto Petrucci (LUISS University)
    Abstract: This paper analyzes the efficient taxation of oil and capital income in an oil-dependent infinite-lived economy facing perfect capital mobility. Two cases are examined: one with product market imperfections and free tax choice, one with perfect competition and tax restrictions. The optimal tax rates on oil and capital strictly depend on the international tax system implemented; however, they are also affected by the degree of market power and the extent to which monopoly profits are taxed, the type of tax restrictions and the use of oil (as an input or a consumer good). Under the residence-based system, capital income should always be exempted from taxation, while the optimal tax on productive oil may differ from zero. Under the source-based system, second-best taxes on capital and oil are non-zero.
    Keywords: Optimal Factor Taxation, Oil, Capital Income, Residence-based System, Source-Based System
    JEL: E62 H21 Q43 Q48
    Date: 2010–02
  5. By: Masako Ikefuji (nstitute of Social and Economic Research Osaka University); Jun-ichi Itaya (Hokkaido University); Makoto Okamura (Hiroshima University)
    Abstract: This paper explores optimal environmental tax policy under which duopoly firms strategically choose the location of their plants in a simple three-stage game. We examine how the relationship between the optimal emission tax and the choice of location of duopoly firms affects the welfare of the home country. We characterize the relationship between the optimal emission tax and the fixed cost, depending on the degree of environmental damage from production. Finally, we show the existence of asymmetric equilibrium in which either firm chooses relocation of its plant even if the duopoly firms are identical ex ante.
    Keywords: Environmental policy, Relocation, Welfare
    JEL: H23 L13
    Date: 2010–01
  6. By: Alejandro Esteller-Moré (Universitat de Barcelona & IEB); Umberto Galmarini (Università dell'Insubria); Leonzio Rizzo (Università di Ferrara & IEB)
    Abstract: We examine the tax assignment problem in a federation with two layers of government sharing an elastic tax base, in which Leviathan policy makers levy an excise tax in an imperfectly competitive market and producers lobby for tax rate cuts. If the lobby of producers is very influential on policy makers, we find that taxation by both layers of government might be optimal, provided that the market of the taxed good is highly concentrated; otherwise, it is optimal to assign the power to tax only to one level of government. Taxation by both layers of government is not optimal either when the influence of the lobby is weak, whatever the degree of market power. We also examine a richer set of tax setting outcomes, by considering the possibility that state policy makers have heterogeneous tax policy objectives.
    Keywords: vertical tax externalities, tax assignment, lobbying, specific taxation
    JEL: H71 H77 D70
    Date: 2010

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