nep-pub 2012-03-14 papers

on Public Finance

Issue of 2012‒03‒14
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

Marginal Taxes: A Good or a Bad for Wages?: The Incidence of the Structure of Income and Labor Taxes on Wages By Pia Rattenhuber
GINI DP 21: Transfer Taxes and Inequality By Jappelli, T.; Padula, M.; Pica, G.

Marginal Taxes: A Good or a Bad for Wages?: The Incidence of the Structure of Income and Labor Taxes on Wages

By:	Pia Rattenhuber
Abstract:	Empirical evidence so far found ambiguous results for the direction of effect of marginal income tax rates on employee remuneration. Based on the GSOEP data from 2002 through 2008 this study analyzes the impact of the marginal tax load on the employee side on the wage rate also allowing average tax rates and employer payroll taxes to play a role. Instrumental variable estimation based on counterfactual tax rates simulated in a highly detailed microsimulation model (STSM) heals the endogeneity problem of the tax variables with regard to wages. Estimations in first differences show that marginal taxes overall have a negative impact on wages. But this effect is not uniform along the wage distribution; while the negative effect of marginal tax rates prevails in the lower part of the distribution, observations beyond the median benefit from higher tax rates at the margin.
Keywords:	Marginal tax rates, tax structure, simulated instrumental variables
JEL:	H22 H24 C26
Date:	2012
URL:	http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1193&r=pub

GINI DP 21: Transfer Taxes and Inequality

By:	Jappelli, T.; Padula, M.; Pica, G.
Abstract:	This study surveys the existing debate on the taxation of the intergenerational transfers. Understanding the effect of transfer taxes on the intergenerational transmission of wealth requires answering the difficult question of what is the effect of taxes on bequest. On the one hand, the economic literature is far from sharing a unanimous view on the exact nature of the motive to leave bequests. On the other, data problems, and in particular lack of data on donors, makes it hard to provide conclusive evidence on the matter. To put the debate in context, we review the legislation on the taxation of intergenerational transfers in several OECD countries. Institutional arrangements on estate taxations vary widely between countries. Despite such heterogeneity, the revenues from taxing intergenerational transfers are generally low, and decreasing from 1% in the mid-sixties to 0.4% after 1980. We take this trend as broadly indicative that little redistribution takes place through taxation of intergenerational transfers. The available evidence and the related theoretical issues make it hard to establish a causal link between the increase in wealth and income inequality and the vanishing transfer tax.
Date:	2011–12
URL:	http://d.repec.org/n?u=RePEc:aia:ginidp:dp21&r=pub

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