nep-pub New Economics Papers
on Public Finance
Issue of 2012‒05‒08
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Sales Taxes and Internet Commerce By Liran Einav; Dan Knoepfle; Jonathan D. Levin; Neel Sundaresan
  2. Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income By Figari, Francesco; Paulus, Alari; Sutherland, Holly; Tsakloglou, Panos; Verbist, Gerlinde; Zantomio, Francesca
  3. Maximum Carbon Taxes in the Short Run By Richard Tol
  4. Social Security's Financial Outlook: the 2012 Update in Perspective By Alicia H. Munnell
  5. Empirical Determinants of Government Efficiency: A study Based on Objective Indicators By Francisca Guedes de Oliveira
  6. THE EFFECT OF MAFIA ON PUBLIC TRANSFERS By Guglielmo Barone; Gaia Narciso

  1. By: Liran Einav; Dan Knoepfle; Jonathan D. Levin; Neel Sundaresan
    Abstract: We estimate the sensitivity of Internet retail purchasing to sales taxes using data from the eBay marketplace. Our first approach exploits the fact that seller locations are revealed only after buyers have expressed interest in an item by clicking on its listing. We use millions of location "surprises" to estimate price elasticities with respect to the effective sales tax. We then use aggregated data to estimate cross-state substitution parameters, and substitution between offline and online purchases, relying on the variation in state and local sales taxes, and on changes in these rates over time. We find substantial sensitivity to sales taxes. Using our item-level approach, we find a price elasticity of around -2 for interested buyers. Using our aggregate approach, we find that a one percentage point increase in a state's sales tax increases online purchases by state residents by just under two percent, but decreases their online purchases from home-state retailers by 3-4 percent.
    JEL: D12 H20 H71 L81
    Date: 2012–04
  2. By: Figari, Francesco (ISER, University of Essex); Paulus, Alari (ISER, University of Essex); Sutherland, Holly (ISER, University of Essex); Tsakloglou, Panos (Athens University of Economics and Business); Verbist, Gerlinde (University of Antwerp); Zantomio, Francesca (University of Essex)
    Abstract: Imputed rental income of homeowners is tax exempt in most countries, despite the long-standing arguments recommending its inclusion in the tax base, on both equity and efficiency grounds. The current fiscal crisis revived interest towards this form of taxation. The paper investigates the fiscal and distributional consequences of including homeowners' imputed rent, net of mortgage interest and maintenance costs, in taxable income as any cash income source that extends consumption opportunities. Three scenarios are analysed in six European countries: in the first imputed rent is included in the taxable income of homeowners, while at the same time existing mortgage interest tax relief schemes and taxation of cadastral incomes are abolished. In two further revenue-neutral scenarios, the additional tax revenue raised through the taxation of imputed rent is redistributed to taxpayers, either through a proportional rebate or a lump-sum tax credit. Results show how including net imputed rent in the tax base might affect inequality in each of the countries considered. Housing taxation appears to be a promising avenue for raising additional revenues, or lightening taxation of labour, with no inequality-increasing side-effects.
    Keywords: housing taxation, imputed rent, income distribution, inequality, microsimulation
    JEL: D31 H23 I31 I32
    Date: 2012–04
  3. By: Richard Tol (Department of Economics, University of Sussex, Institute for Environmental Studies and Department of Spatial Economics, Vrije Universiteit, Amsterdam)
    Abstract: A cap is imposed on the carbon tax rate if the total tax revenue is not allowed to increase. Using recent data on the carbon-intensity of the economy and the overall tax take, I show that this cap constrains almost any climate policy in at least some countries. A larger number of countries, emitting a substantial share of global carbon dioxide, cannot fully participate if the carbon tax (or equivalent alternative regulation) is high enough to meet the 2ºC target. For that target, the carbon tax revenue in 2020 is greater than 10% of total tax revenue in every country.
    Keywords: climate policy, carbon tax, target setting
    JEL: H21 Q54
    Date: 2012–04
  4. By: Alicia H. Munnell
    Abstract: The 2012 Trustees Report shows a significant increase in the program's 75 year deficit from 2.22 percent to 2.67 percent of taxable payroll and an advance in the date of trust fund exhaustion from 2036 to 2033. These changes reflect the slow recovery from the recession and rising disability rolls, among other factors. While the deficit is larger and the date of exhaustion nearer, the story remains the same. The program faces a manageable financing shortfall over the next 75 years, which should be addressed soon to restore confidence in the nation's major retirement program and to give people time to adjust to needed changes.
    Date: 2012–04
  5. By: Francisca Guedes de Oliveira (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto)
    Abstract: This paper is concerned with two things: finding an objective and easily quantifiable measure of government efficiency and testing possible determinants of such quality. As measures of government efficiency we use the ratios of infant mortality rate to health expenditures as a percentage of GDP and the ratios of drop out and illiteracy rates to education expenditures as a percentage of GDP. We assume that government efficiency in providing health and education services depends on economic, political and cultural factors.
    Keywords: Government quality; Public good provision; Efficiency; political determinants, cultural determinants, economic determinants.
    JEL: H11 I0
    Date: 2012–04
  6. By: Guglielmo Barone (Bank of Italy, Economic Research Department, Branch of Bologna, Piazza Cavour 6, 40124, Bologna, Italy); Gaia Narciso (Trinity College Dublin, CReAM and IIIS, Department of Economics, 3012 Arts Building, Dublin 2, Ireland)
    Abstract: This paper analyzes the impact of organized crime on the allocation of public transfers. We assemble an innovative data set on Italian mafia and public funds to businesses at municipality level and instrument current mafia activity with rainfall in the XIX century and geographical shifters of land productivity. We show that organized crime greatly increases the amount of public funds to businesses. Mafia is also found to lead to episodes of corruption in the public administration sector. Our results suggest that the design of geographically targeted aid policies should take into account local crime conditions.
    Keywords: organized crime, public transfers, corruption
    JEL: H4 K4 O17
    Date: 2012–04

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