nep-pub New Economics Papers
on Public Finance
Issue of 2012‒05‒29
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Problems in taxation: An optimization approach for loss offset options By Schanz, Sebastian; Schmidt, Günter; Dinh, Hai-Dung; Kersch, Mike
  2. Informal Taxation By Olken, Benjamin A.; Singhal, Monica
  3. Governmental Transfers and Altruistic Private Transfers By Amihai Glazer; Hiroki Kondo
  4. Fiscal policy and corruption By Jean-Paul Azam; Bernard Gauthier; Jonathan Goyette
  5. Is Public-Private Partnership Obsolete? By Claude Ménard
  6. Income redistribution through taxes and social benefits: the case of Slovenia and Croatia By Cok, Mitja; Urban, Ivica; Verbič, Miroslav

  1. By: Schanz, Sebastian; Schmidt, Günter; Dinh, Hai-Dung; Kersch, Mike
    Abstract: We solve an optimization problem which arises in the German tax system. Here losses in some period can be tranferred to other periods reducing tax in these periods. Two variants of taxation can be applied. We formulate the problem as a mixed binary mathematical program and solve it via branch and bound using binary search. Special cases of the problem can be solved by fast polynomial algorithms. --
    Date: 2012
  2. By: Olken, Benjamin A.; Singhal, Monica
    Abstract: Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional implications of this "informal taxation." Informal taxation is wide- spread, particularly in rural areas, with substantial in-kind labor payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more regressive than formal taxes. Failing to include informal taxation underestimates household tax burdens and revenue decentralization in developing countries. We discuss various explanations for and implications of these observed stylized facts.
    Date: 2011
  3. By: Amihai Glazer (Department of Economics, University of California-Irvine); Hiroki Kondo (Department of Economics, Sophia University)
    Abstract: An altruistic agent who may aid a person with a low income may induce that person to exert little effort to increase his income. Such behavior generates a Good Samaritan Dilemma, in which welfare is lower than when no one is altruistic. Governmental transfers, which restrict reallocation from a person who saves much to one who saves little, reduce the effect, and can lead to an outcome which is Pareto-superior to the outcome under a Nash equilibrium with no government taxation and transfers.
    Keywords: Social security; Moral hazard; Savings; Altruism
    JEL: D13 D64 D91
    Date: 2012–05
  4. By: Jean-Paul Azam (Institut d’économie industrielle, Université de Toulouse 1); Bernard Gauthier (Institut d’économie appliquée, HEC Montréal); Jonathan Goyette (Department of Economics and GRÉDI, Université de Sherbrooke)
    Abstract: The paper investigates the conflict that arises between the government, its bureaucrats and businesses in the tax collection process. We examine the effect of fiscal policy and corruption control mechanisms on the prevalence of tax evasion and corruption behaviour, and their impact on firm growth and social welfare. We first model a situation where bureaucrats are homogeneous and have complete bargaining power over firms in the negotiation of bribes during the tax collection process. In such a situation, the government can choose an optimal policy that involves the joint determination of a tax rate and a probability of detection of corrupt bureaucrats which leads to a no-corruption equilibrium. However, when the public administration is composed of bureaucrats with heterogeneous types defined by their ability to impose red tape costs on firms, we find that it is optimal to allow a certain level of corruption, given the cost of monitoring activities. We show how a government could face lose-lose as well as win-win situations in the conduct of its fiscal policies.
    Keywords: Corruption, Tax evasion, Tax administration
    JEL: D73 H21 H26 H32 D82
    Date: 2012–05
  5. By: Claude Ménard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: Public-Private Partnership has been high on the agenda of public decision makers since the 1990's. Primarily a contractual approach to the delivery of infrastructures, goods and services traditionally provided by the public sector or by private operators submitted to tight regulation, PPP is also a very special contractual practice as it seeks to introduce market-type relationships in a context in which non-market forces play a major role. An important consequence is the overlapping of decision rights as well as property rights, which exposes PPP to a double alignment problem, organizational and institutional. Away from the ideological controversies about the legitimacy of PPP in provisioning public goods, this chapter focuses on problems rooted in the very nature of PPPs and the actual design of their supportive contracts, as well as in the institutions in which they are embedded and that define the capacity to implement and monitor these arrangements properly.
    Keywords: Public-Private Partnership; transaction costs; organization; infrastructures; misalignment
    Date: 2011–10–28
  6. By: Cok, Mitja; Urban, Ivica; Verbič, Miroslav
    Abstract: The article analyses the redistributive effect attained by personal income tax, social security contributions and social benefits in Slovenia and Croatia. The redistributive effect is decomposed first to reveal progressivity and horizontal inequity effects, and further to show contributions of different tax and benefit instruments. Even though both countries started from the same socioeconomic background two decades ago, the current results reveal divergence that is a consequence of diverse development during this period. The results indicate that Croatia experienced significantly higher pre-fiscal income inequality and lower redistributive effect than Slovenia. Horizontal inequity effects, though, were higher in Slovenia than in Croatia. In both countries, the means-tested social benefits exerted an over-proportionate influence on vertical effects, suggesting a strong impact of the welfare state on income position of their residents, but also induced a large amount of horizontal inequity. In Slovenia, the non-means-tested benefits slightly increased income inequality.
    Keywords: redistributive effect; horizontal inequity; taxes and benefits; decomposition; Slovenia; Croatia
    JEL: D31 D33 H24 H23
    Date: 2012–02

This nep-pub issue is ©2012 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.