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on Public Finance |
| By: | Peter J. Lambert and Thor O. Thoresen (Statistics Norway) |
| Abstract: | The overall inequality effects of a dual income tax (DIT) system, combining progressive taxation of labor income with proportional taxation of income from capital, are investigated. Simple examples show that correlations between distributions of wage and capital income, the degree of tax rate differentiation in the DIT, and reranking of tax-payers can be expected to complicate the analysis. We trace out what can be said definitively, obtaining sufficient conditions for unambiguous inequality reduction and identifying the nature of the implicit redistribution between labor and capital income which is involved, with the help of Norwegian income tax data. |
| Keywords: | Personal income tax; dual income tax; redistributive effect |
| JEL: | D31 D63 H31 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:663&r=pub |
| By: | Paul Eckerstorfer (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | This paper extends the previous literature on optimal redistributive taxation in the presence of externalities to a multi-externality setting. While taxes on income and on 'clean' commodities are still unaffected by the externalities, which confirms previous results, I find that the existence of more than one externality-generating commodity has important implications for the optimal Pigouvian tax rates. In general the Pigouvian parts of taxation depend also on the externalities induced by the consumption of the other commodities, implying that the interdependence of the externality-generating commodities is relevant for tax policy. |
| Keywords: | Optimal Taxation, Externalities |
| JEL: | D82 H21 H23 H24 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2011_10&r=pub |
| By: | Johann K. Brunner (Department of Economics, Johannes Kepler University Linz, Austria); Susanne Pech (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | Inherited wealth creates a second distinguishing characteristic of individuals, in addition to earning abilities. We incorporate this fact into a model of optimal labor income taxation, with bequests motivated by joy of giving. We find that taxes on bequests or on inheritances allow further redistribution, if in the parent generation initial wealth and earning abilities are positively related. On the other hand, these taxes distort the bequest decision; thus, the overall effect on social welfare is ambiguous. A tax on all expenditures of a generation (a uniform tax on consumption plus bequests) has the same redistributive effect as an inheritance tax but does not distort the bequest decision. |
| Keywords: | optimal taxation, inheritance tax, expenditure tax, intergenerational wealth transfer |
| JEL: | H21 H24 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2011_12&r=pub |
| By: | Jan Wouters and Katrien Meuwissen |
| Abstract: | The international financial crisis which broke out in 2008 has had a major impact on fiscal sustainability of countries all over the world. Countries have responded with varying measures. Moreover, in the aftermath of the global financial crisis, international initiatives regarding tax governance have gained political momentum; various initiatives regarding fiscal policy have been taken at the global level, and several policies with implications for national tax policy and law are conducted at that level . Therefore, this paper will give an overview of the international tax initiatives at the level of the Group of Twenty (G-20), the Organization for Economic Cooperation and Development (OECD), the United Nations (UN), the International Monetary Fund (IMF) and the World Trade Organization (WTO). These international tax initiatives cannot be referred to as 'international tax law'. It would be more appropriate to see them as a hesitant beginning of a form of global tax governance''. This contribution will show that the unequivocal fiscal principle of ‘no taxation without representation’ poses an important challenge for the emergence of legitimate global tax governance, as most of the international initiatives lack an inclusive process. Whereas multiple international tax initiatives exist, we cannot yet discern the existence of globally effective tax governance. |
| Date: | 2011–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euirsc:p0280&r=pub |
| By: | Cremer, Helmuth; Gahvari, Firouz; Ladoux, Norbert |
| Abstract: | This paper examines if an energy price shock should be compensated by a reduction in energy taxes to mitigate its impact on consumer prices. Such an adjustment is often debated and advocated for redistributive reasons. Our investigation is based on a model that characterizes second-best optimal taxes in the presence of an externality generated by energy consumption. Energy is used by households as a consumption good and by the productive sector as an input. We calibrate this model on US data and proceed to simulations of this empirical model. We assume that energy prices are subject to an exogenous shock. For different levels of this shock, we calculate the optimal tax mix including income, commodity and energy taxes. We show that optimal energy taxes are affected by redistributive consideration and that optimal energy tax is less than the Pigouvian tax (marginal social damage). The difference is an implicit subsidy representing roughly 10% of the Pigouvian price. Interestingly, the simulations show that an variation in the energy price only has an almost negligible effect on this percentage. In other words, even a very large oil price increase will only have a small effect on the optimal tax on energy. Nevertheless, it appears that the energy tax is used to mitigate the impact of the energy shock. However, this result is not explained by redistributive consideration but by the fact that the Pigouvian tax (rate) decreases as the price of energy increases. This is a purely arithmetic adjustment due to the fact that the marginal social dammage does not change. Consequently, the marginal dammage as a percentage of the energy price (which defines the Pigouvian tax rate) decreases as the price increases. |
| JEL: | H21 H23 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:24971&r=pub |