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on Public Finance |
| By: | Boeters, Stefan |
| Abstract: | Changing the income tax progressivity in labour markets with collective wage bargaining generates a trade-off. On the one hand, higher progressivity distorts individual labour supply decisions at the hours-of-work margin, on the other hand, it reduces unemployment by exerting downward pressure on wages. This trade-off is quantitatively assessed using a numerical model for Germany. The model combines a microsimulation module, which captures the labour-supply decisions of approximately 4600 individual households, and a macro (computable general equilibrium) module, which features collective wage bargaining and involuntary unemployment. In the simulations carried out using this model, the optimal degree of tax progressivity turns out to be higher than the one in the actual German tax schedule. The optimum is located at marginal tax rates that are 6 percentage points higher than the actual rates (combined with a transfer that balances the public budget). The welfare gain from such a reform is modest, however. It amounts to no more than two euros per person per month. -- |
| Keywords: | labour taxation,tax progressivity,optimal taxation,collective wage bargaining,unemployment,microsimulation,computable general equilibrium model |
| JEL: | C63 C68 H21 J22 J51 J64 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10035&r=pub |
| By: | A Krause; |
| Abstract: | This paper shows that tax reforms involving an increase in consumption taxes and a decrease in income taxes cannot always be designed in a way that protects the welfare of some chosen class of consumer (e.g., low-income households), even if the government is indifferent to the welfare effects on all other consumers. This is contrary to common intuition and claims by some governments. |
| Keywords: | Tax incidence; consumption taxes; income taxes; tax reform. |
| JEL: | D6 H22 |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:10/17&r=pub |
| By: | Salois, Matthew J; Tiffin, Richard |
| Abstract: | The extant literature on fat taxes and thin subsidies tends to focus on the overall effectiveness of such fiscal instruments in altering diets and improving health. However, little is known about the welfare impacts of fiscal food policies on society. This paper fills a gap in the literature by assessing the distributional impacts and welfare effects resulting from a tax-subsidy combination on different food groups. Using the methods derived from marginal tax reform theory, a formal welfare economics framework is developed allowing the calculation of the distributional characteristics of various food groups and approximate welfare measures of prices changes caused by a tax-subsidy combination. The distributional characteristics reveal that many of the food groups target by a fat tax are consumed in greater concentration by low-income households than higher-income households. The overall welfare effect of a fat tax and thin subsidy combination is found to be negative, meaning that the thin subsidy is not enough to compensate for the negative impacts of the fat tax. |
| Keywords: | distributional characteristic, fat tax, obesity, thin subsidy, welfare., Health Economics and Policy, D30, D60, H20, I10, I30., |
| Date: | 2010–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aesc10:91754&r=pub |
| By: | Toshihiro Ihori (Faculty of Economics, University of Tokyo) |
| Abstract: | This paper investigates how the soft-budget constraint with grants from the central government to local governments tends to internalize the vertical externality of local public investment by stimulating local expenditure when both the central and local governments impose taxes on the same economic activities financed by public investment. The model incorporates the local governments' rent-seeking activities in a multi-government setting. The soft-budget constraint is welfare deteriorating because it stimulates rent-seeking activities, although a soft-budget game may attain the first-best level of public investment. |
| Date: | 2010–07 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2010cf750&r=pub |
| By: | M. Menegatti; D. Baiardi |
| Abstract: | The paper examines the effects of environmental uncertainty on Pigouvian tax and abatement policy used, either separately or contemporaneously, to counteract pollution. We discuss uncertainty in three aspects: environmental quality, pollution effect and the impact of abatement. For each case we determine the conditions ensuring that uncertainty increases the size of public intervention and provide an economic interpretation and some parallelisms with other risk problems. The last part of the paper generalizes some of our results to the case of N-th order risk changes. |
| Keywords: | Pigouvian tax, Abatement policies, Environment, Uncertainty, Bivariate utility |
| JEL: | H23 D81 Q5 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:par:dipeco:2010-ep04&r=pub |
| By: | Finke, Katharina; Heckemeyer, Jost H.; Reister, Timo; Spengel, Christoph |
| Abstract: | The German corporate tax reform of 2008 has brought about important cuts in corporate tax rates, which were at the same time accompanied by significant changes in the determination of the tax base for both major German corporate taxes - corporate income tax and trade tax. The reform followed the distinct and internationally prevalent pattern of tax rate cut cum base broadening. Its implications are thus not unique to Germany. Especially in view of the current economic crisis, questions on the distribution of the tax burden among firms of different characteristics have arisen and still remain at the heart of the academic and political debate in Germany and other countries. In this paper we present a new corporate microsimulation model, ZEW TaxCoMM, which allows for the coherent micro-based analysis of revenue implications of tax reforms and the distribution of tax consequences among heterogeneous firms. The model processes firm-level financial accounting input data and derives the firm specific tax base and tax due endogenously in accordance with the tax code. To smooth out distortions between the sample and the population of German corporations, the sample is extrapolated on the basis of the corporate income tax statistic. The simulation results show inter alia that the average annual relief as measured by the average decline in the effective tax burden on cash flow amounts to 2.8 percentage points for large corporations and to 6 percentage points for small corporations. Furthermore, the results illustrate that firms with low profitability, high debt ratio and high capital intensity benefit least from the reform. As to tax revenues, the reform induced decrease amounts to 9.8 billion and the trade tax gains fiscally in importance. -- |
| Keywords: | tax reform,microsimulation,tax policy evaluation |
| JEL: | H25 H32 K34 C8 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:10036&r=pub |
| By: | Hans-Georg Petersen |
| Abstract: | In the first part of the report of the GTZ expert group an overview on the basics of integration and tax harmonisation within a common market is given. Chapter II. concentrates on the problems of national and international tax law regarding double taxation before the harmonisation process within the EU is described in detail. This process is not a best practice example but at least the experiences made in the course of the last five decades are interesting enough and might contribute important information for regions, which more or less recently have started a similar endeavour. The harmonisation needs are discussed for value added taxation (VAT), excise taxation, and income taxation. The problems of tax administrations, procedures laws, taxpayers’ rights and obligations as well as tax compliance are also taken into consideration. The second part of the study reviews the national tax systems within the EAC member countries. Before the single taxes are described in more detail, the macroeconomic situation is illuminated by some basic figures and the current stand of the inner-community integration analysed. Then the single tax bases and tax rates are confronted to shed some light on the necessities for the development of a common market within the near future. Again the value added tax laws, excise taxes and income taxes are discussed in detail, while regarding the latter the focus is on company taxation. For a better systematic analysis the national tax laws are confronted within an overview. The chapter is closed with a summary of the tax rates applied and a rough estimation of the tax burdens within the Partner States. The third part of this report contains the policy recommendations of the expert group following the same structures as the chapters before and presenting the results for the VAT, the excises and the corporate income tax (CIT). Additionally the requirements for tax procedures and administration as well as problems of transparency and information exchange are discussed in detail before the strategic recommendations are derived in close relation to the experiences made within the EU harmonisation process. The recommendations are based on the following normative arguments: (1) Tax harmonisation is a basic requirement for economic integration. (2) Equality of taxation is an imperative of tax justice and demands the avoidance of double taxation as well as the combat of tax evasion and corruption. (3) The avoidance of harmful tax competition between the Partner States. (4) The strengthening of taxpayers’ rights in tax procedures. Hence, all kinds of income, goods and services should be taxed once and only once. |
| Keywords: | Centralization, decentralization, ethnic differences, fiscal federalism, fiscal planning, good governance, harmonization, integration, nation building, revenue sharing, sustainable fiscal policy, tax reform. Compliance, corruption, direct taxes, double taxation, East African Community, indirect taxes, information exchange, integration, international tax law, revenue authorities, tax administration, taxation, tax harmonization, tax system, transparency. |
| JEL: | H2 H7 H83 F5 F15 N47 O2 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:pot:fiwidp:60&r=pub |