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on Public Finance |
| By: | Bargain, Olivier; Dolls, Mathias; Neumann, Dirk; Peichl, Andreas; Siegloch, Sebastian |
| Abstract: | Whether observed differences in redistributive policies across countries are the result of differences in social preferences or efficiency constraints is an important question that paves the debate about the optimality of welfare regimes. To shed new light on this question, we estimate labor supply elasticities on microdata and adopt an inverted optimal tax approach to characterize the redistributive preferences embodied in the welfare systems of 17 EU countries and the US. Implicit social welfare functions are broadly compatible with the fiction of an optimizing Paretian social planner. Some exceptions due to generous demogrant transfers are consistent with the ignorance of behavioral responses by some European governments and are partly corrected by recent policy developments. Heterogeneity in leisure-consumption preferences somewhat affect the international comparison in degrees of revealed inequality aversion, but differences in social preferences are significant only between broad groups of countries. |
| Date: | 2011–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ese:emodwp:em2-11&r=pub |
| By: | Castanheira, Micael; Nicodème, Gaëtan; Profeta, Paola |
| Abstract: | There is often a gap between the prescriptions of an “optimal” tax system and actual tax systems, some of which can be neither efficient economically nor efficient at redistributing income. With a focus on personal income taxes, this paper reviews the political economics literature on tax systems and reforms to see whether political mechanisms allow us to better understand why tax systems look the way they look. Finally, we exploit a database of reforms in labour taxation in the European Union to check the determinants of all reforms, on the one hand, and of targeted reforms, on the other hand. The results fit well with political economy theories and show that political variables carry more weight in triggering reforms than economic variables. This shed light on whether and how tax reforms are achievable. It also explains why many reforms that seem economically optimal fail to be implemented. |
| Keywords: | personal income tax; political economy; taxation |
| JEL: | H11 H21 H24 P16 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8507&r=pub |
| By: | John Creedy (Department of Economics, The University of Melbourne); Nicolas Hérault (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) |
| Abstract: | This paper presents two 'non-welfarist' approaches and one 'welfarist' approach to decompose changes in inequality and social welfare into three components. We distinguish the contributions of population, tax policy and labour supply behavioural effects. As an illustration, we decompose changes in inequality and in values of a social welfare function in Australia between 2001 and 2006. Inequality is first defined in non-welfarist terms as a function of disposable income: the independent judge places no value on leisure. Then this is modified to allow for evaluations using a weighted geometric mean of disposable income and leisure. This is seen to modify the evaluation of changes in important ways. Furthermore, the results are shown to be quite different from those obtained using a 'welfarist' evaluation in terms of money metric utility, where separate behavioural effects cannot be isolated. |
| Keywords: | Inequality decomposition, social welfare function, behavioural microsimulation, money metric utility |
| JEL: | D63 H31 I31 J22 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iae:iaewps:wp2011n08&r=pub |
| By: | Elena Briata |
| Abstract: | The aim of this paper is to provide an overview of Reagan’s fiscal Reform. It mainly involves an investigation of the legislative features of the Reform and of the underpinning economical theory. The study focuses on the impact of such a Reform on the economy. The paper comprises four main parts. The first part is devoted to the analysis of both Reagan’s fiscal policy actions in the 1980s and of the regulatory touch. In particular the first part investigates two main Laws, which reduced private marginal tax rates: the Economic Recovery Tax Act (1981) and the Tax Reform Act (1986). The second part introduces and analyses the so-called “Supply-Side Economics”, the main theory on which Reagan's Reform is based. Indeed the core of “Supply-Side Economics” was the “Laffer Curve” where tax rate cuts played a central role. The last two parts deal with the concrete effects of private marginal tax rate cuts. In particular, inequality and fiscal revenue. It also focuses on the criticisms against the Reform. Fiscal revenue is observed in a wider context. The paper first investigates the source of the deficits recorded during the 1980s. It relates these deficits to general government revenues and general government expenditures. Subsequently, general government revenues are broken down into their parts and the development of federal income tax revenue is carefully observed. Inequality is investigated through the Gini index. The paper touches briefly on the changes to the Gini index after Reagan’s two main fiscal Laws took effect. Furthermore, inequality is related to the progression of the tax system and then calculated through the Reynolds-Smolensky Index. |
| Keywords: | Reagan’s fiscal policy, supply-side economics, revenue, inequality |
| JEL: | H24 E62 N42 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:gea:wpaper:4/2011&r=pub |
| By: | Bossi, Luca; Calcott, Paul; Petkov, Vladimir |
| Abstract: | This paper studies implementation of the social optimum in a model of habit formation. We consider taxes that address inefficiencies due to negative consumption externalities, imperfect competition, and self-control problems. Our contributions are to: i) account for producers’ market power; and ii) require implementation to be robust and time consistent. Together, these features can imply significantly lower taxes. We provide a general characterization of the optimal tax rule and illustrate it with two examples. |
| Keywords: | dynamic externalities, internalities, addiction, optimal taxation, time consistent implementation, |
| Date: | 2011–06–23 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:1673&r=pub |
| By: | Libman, Alexander; Schultz, André; Graeber, Thomas |
| Abstract: | The accuracy of a tax return is usually interpreted as an outcome of the tax evasion decision by an individual. However, in non-democratic regimes with predatory blackmail tax systems it is possible that large sums voluntarily reported by influential politicians or businessmen may be used as political statements. By openly acknowledging one's personal income an individual can signal the strength of one's position, or, on the contrary, the submissiveness to the political leadership. In this paper we explore the idea of the tax return as a political statement and test it using a unique dataset of the tax returns filed by the Russian regional governors and the members of their families for the year 2009. Our results conjecture that Russian governors may deliberately file their tax return as a political statement to signal their strength vis-à-vis the central government. -- |
| Keywords: | tax compliance,communication in non-democracies,Russian regions |
| JEL: | D73 D78 H26 P26 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:169&r=pub |