nep-pub New Economics Papers
on Public Finance
Issue of 2011‒07‒13
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. A Wealth Tax Abandoned: The role of the UK Treasury 1974-6 By Howard Glennerster
  2. Top tax system: a common taxation system for all nations By Varma, Vijaya Krushna Varma
  3. What Has Happened to Quebecers’ Marginal Effective Tax Rates? By Alexandre Laurin; Finn Poschmann
  4. Decomposing Redistributive and Reranking Effects to Reveal Contributions of Taxes and Benefits By Ivica Urban
  5. Inequality, Growth and Public Spending in Central, East and Southeast Europe By Mario Holzner

  1. By: Howard Glennerster
    Abstract: The distribution of wealth is widening in many countries and with it the importance of inherited wealth. In 1974 a Labour Government came to power in the United Kingdom committed to introducing an annual wealth tax. It left office without doing so. Using the official archives of the time and those of a key advisor this paper traces both the origins of the policy and its fate in Whitehall. It explores two related questions. What does this experience tell us about the role of the civil service in the policy process in the UK and what lessons might be learned by those wishing to tackle the issue of widening wealth disparities today?
    Keywords: wealth tax, policy process, UK Treasury
    JEL: H27
    Date: 2011–06
  2. By: Varma, Vijaya Krushna Varma
    Abstract: I am suggesting new methods, and innovative and alternative policies in the areas of optimal taxation, tax collection, money supply and banking financial system to help remove corruption, tax evasion, economic recession, black money, fake currency and societal inequalities. In my opinion, the proposed TOP Tax system may usher in good governance, 100% tax compliance and corruption free environment. It suggests a single tax called “TOP Tax” (Transfer Or Purchase Tax) for both Centre and States combined in place of present multiple Indirect taxes with different slab rates on different goods/commodities/services and multiple Direct taxes with different slab rates, relieving people from the cobweb of ambiguous and complex tax structures, plethora of tax laws, mandatory and cumbersome accounting, auditing, tax returns and consequent quagmire of all tax related cases. Therefore the numerous tax exemptions and exclusions, which have invariably narrowed the tax base, will no longer be needed. This new TOP Tax system with only single tax (TOP Tax) envisages 20 to 30 % more revenues than presently accruing from multiple taxes collected by different departments/agencies. The availability of resources and capital flows, needed for economic recovery, is the self-priming character of the “TOP Tax system” without Government’s fiscal stimulus packages. This new taxation shall be operated at minimum operating cost with limited paper currency, thereby totally eliminating fake currency, black money, tax evasion, corruption and extortions. Under this new taxation system the tax net will be the broadest with absolutely no tax evasion, making it possible for the lowest tax slab rate and cheapest prices of commodities/services. The redistribution of revenues from Government to people in the form of welfare schemes, subsidies and various relief funds will become easier without leakages, bribes and misappropriation. Although this new taxation system is a basic model suggested mainly for India, the basic concept of taxation and tax collection methods can be adopted and implemented by all the developed and developing countries alike to benefit 6.5 billion people of the world in all spheres of their lives in one form or other.
    Keywords: Single tax system; A new taxation system; Redefining the role of banking sector; optimal taxation; tax collection; money supply; lowest interest rates; Economy that will run on limited paper currency and dematerialised money
    JEL: E62 E43 E51 H24 H2 H71 H63 H21 H25 E52 E40 H61 H26 G21
    Date: 2009–05–31
  3. By: Alexandre Laurin (C.D. Howe Institute); Finn Poschmann (C.D. Howe Institute)
    Abstract: More than a decade after Quebec and the federal government implemented significant personal income tax rate reductions, what has happened to Quebecers’ take-home pay? This paper answers the question by looking at marginal effective tax rates (METRs) on personal income, which measure the impact of federal and provincial income taxes combined with the impact of reductions and clawbacks of income-tested tax credits and benefits. Income-tested credits and benefits mostly target financial support to low-to-middle income families with children and to low-income seniors. However, clawbacks and rate reductions apply to those credits and benefits as incomes rise above set thresholds, raising METRs for those income groups and family types. Overall, METRs are lower than a decade ago, but for many low-to-middle income Quebec families with children, they are higher. The province’s residents generally face the highest tax rates in the country, with an average METR in 2011 exceeding the national average by four percentage points.
    Keywords: Fiscal and Tax Competitiveness, Province of Quebec, marginal effective tax rates (METRs)
    JEL: E52 E61 E64
    Date: 2011–05
  4. By: Ivica Urban
    Abstract: New decompositions of redistributive effects are developed, revealing the relative contributions of different tax and benefit instruments. The methodology uses a “micro-approach” in the study of income inequality, where different indicators are first calculated for pairs of income units, and then aggregated to the population level. This approach is much more suitable for scrutinizing various income transitions emerging from fiscal activities than the usual apparatus of Lorenz and concentration curves. Emerging within this framework are also the concepts of fiscal deprivation, distance narrowing deprivation from reranking; their connections with widely known indices of redistributive, vertical and reranking effects are established. The methodology is applied in an analysis of the Croatian system of direct taxes and cash social benefits.
    Keywords: redistributive effect, reranking effect, taxes, benefits
    JEL: D63 H22 H23
    Date: 2010–07
  5. By: Mario Holzner (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The article analyses the joint determinants of inequality and growth with a special emphasis on public spending structures in transition. The mutual benefit of low real interest rates, to both equity and economic development is a major result of this paper. In terms of public spending items we find a positive correlation with equity and a negative with growth as several of the government expenditure items seem to act counter-cyclically. In the late 1990’s and early 2000’s the European integration process allowed most of the transition economies to aim for the best of both worlds: equity and economic development.
    Keywords: Inequality, Government Expenditures, Economic Growth, Transition
    JEL: D63 H5 O4 P2
    Date: 2010–10

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