nep-pub 2011-08-29 papers

on Public Finance

Issue of 2011‒08‒29
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

Old-age Social Security vs. Forward Intergenerational Public Goods Provision By Ryo Arawatari; Tetsuo Ono
Tax Competition Between Sub-Central Governments By Hansjörg Blöchliger; José Maria Pinero Campos
Endogenous Norm Formation Over the Life Cycle – The Case of Tax Evasion By Nordblom, Katarina; Zamac, Jovan

Old-age Social Security vs. Forward Intergenerational Public Goods Provision

By:	Ryo Arawatari (yGraduate School of Economics, Nagoya University, Furo-cho, Chikusa-ku, Nagoya); Tetsuo Ono (Graduate School of Economics, Osaka University)
Abstract:	This paper introduces an overlapping-generations model with earnings hetero- geneity and borrowing constraints. The labor income tax and the allocation of tax revenue across social security and forward intergenerational public goods are determined in a bidimensional majoritarian voting game played by successive gen- erations. The political equilibrium is characterized by an ends-against-the-middle equilibrium where low- and high-income individuals form a coalition in favor of a low tax rate and less social security while middle-income individuals favor a high tax rate and greater social security. Government spending then shifts from social security to public goods provision if higher wage inequality is associated with the borrowing constraint and a low interest-rate elasticity of consumption.
Keywords:	Borrowing constraint; Old-age social security; Forward intergenera- tional public goods; Ends-against-the-middle equilibrium; Wage inequality
JEL:	H41 H55 D72
Date:	2011–08
URL:	http://d.repec.org/n?u=RePEc:osk:wpaper:1126&r=pub

Tax Competition Between Sub-Central Governments

By:	Hansjörg Blöchliger; José Maria Pinero Campos
Abstract:	Sub-central tax competition is the strategic interaction of tax policy between jurisdictions with the objective to attract and retain mobile tax bases. The views on tax competition differ widely: while some consider that tax competition brings sub-central fiscal policy closer to citizen?s preferences, increases the efficiency of the public sector and avoids tax and spending excesses, others argue that tax competition leads to a distorted tax structure, to growing tax rate disparities and to an under-provision of public services. The main conclusions of the paper are: tax competition is stronger on mobile taxes (corporate and personal income tax) than on immobile taxes (property tax, consumption taxes); tax rates tend to be lower in wealthier jurisdictions; there is little evidence of a “race to the bottom” with respect to tax rates and tax revenues; and inter-jurisdictional differences in tax raising capacity – or economic wealth – appear to be lower in countries with more tax competition. Governments considering tax competition “excessive” may introduce or amend fiscal equalisation; increase sub-central property taxation and reduce other sub-central taxes; or harmonise the tax bases of sub-central governments to some extent.<P>Concurrence fiscale entre administrations infranationales<BR>La concurrence fiscale entre administrations infranationales désigne l?utilisation stratégique de la politique fiscale dans le but d?attirer et de conserver les bases d?imposition mobiles. La concurrence fiscale suscite des avis partagés : certains considèrent qu?elle permet de rapprocher la politique budgétaire des administrations infranationales des attentes des citoyens, accroît l?efficience du secteur public et évite les excès en matière de prélèvements fiscaux et de dépenses, tandis que d?autres estiment qu?elle fausse la structure d?imposition, entraîne des disparités croissantes de taux d?imposition et pénalise l?offre de services publics. Les principales conclusions de ce document sont les suivantes : la concurrence fiscale est plus forte pour les bases d?imposition mobiles (impôt sur les bénéfices des sociétés et impôt sur le revenu des personnes physiques) que pour les bases immobiles (impôts fonciers, impôts sur la consommation) ; les taux d?imposition sont généralement inférieurs dans les juridictions plus riches ; il n?y a guère de signes de « nivellement par le bas » en matière de taux d?imposition et de recettes fiscales ; les différences en termes de capacités de recouvrement de l?impôt entre juridictions – ou richesse économique – sont moins marquées dans les pays où la concurrence fiscale est plus vive. Les pays qui jugent que la concurrence fiscale est « excessive » peuvent mettre en place un mécanisme de péréquation budgétaire ou, s?il existe déjà, en revoir les modalités ; alourdir la fiscalité immobilière et réduire d?autres impôts prélevés par les administrations infranationales ; ou procéder à une certaine harmonisation des bases d?imposition des administrations infranationales.
Keywords:	fiscal federalism, tax competition, tax autonomy, sub-national tax policy, sub-central government, fédéralisme budgétaire, Concurrence fiscale, autonomie fiscale, politique fiscale infranationale, administration infranationale
JEL:	H21 H71 H77
Date:	2011–05–31
URL:	http://d.repec.org/n?u=RePEc:oec:ecoaaa:872-en&r=pub

Endogenous Norm Formation Over the Life Cycle – The Case of Tax Evasion

By:	Nordblom, Katarina (Uppsala Center for Fiscal Studies); Zamac, Jovan (Uppsala Center for Fiscal Studies)
Abstract:	This paper offers an explanation to why the general observation that elderly hold stronger moral attitudes than young ones may be an age rather than a cohort effect. We apply mechanisms from social psychology to explain how personal norms may evolve over the life cycle. We assume that people update their norms influenced by their own past behavior (e.g., cognitive dissonance) and/or by the attitudes of their peers (normative conformity). We apply the theory on actual norm distributions for young and old concerning tax evasion. Allowing for heterogeneous updating of norms where only those who identify with their network are actually conforming with it, while the others are only influenced by their own past behavior, we can explain the difference between young and old people’s moral values as an age effect through endogenous norm formation.
Keywords:	Social norms; Endogenous norms; Tax evasion; Cognitive dissonance; Self-signaling; Normative conformity
JEL:	H26
Date:	2011–08–19
URL:	http://d.repec.org/n?u=RePEc:hhs:uufswp:2011_010&r=pub

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