nep-pub New Economics Papers
on Public Finance
Issue of 2012‒09‒09
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Taxation in a Limited Commitment Economy By Yena Park
  2. Corporate taxation and exports By Federici, Daniela; Parisi, Valentino
  3. Fairness Spillovers – The Case of Taxation By Thomas Cornelißen; Oliver Himmler; Tobias Koenig
  4. Negative Income Taxes, Inequality, and Poverty By Constantine Angyridis; Brennan S. Thompson
  5. Uneven treatment of family life? Horizontal equity in the U.S. tax and transfer system By Bönke, Timm; Eichfelder, Sebastian; Utz, Stephen

  1. By: Yena Park (Department of Economics, University of Pennsylvania)
    Abstract: This paper studies optimal Ramsey taxation when risk sharing in private insurance markets is imperfect due to limited enforcement. In a limited commitment economy, there are externalities associated with capital and labor because individuals do not take into account that their labor and saving decisions affect aggregate supply, wages and thus the value of autarky. Due to these externalities, the Ramsey government has an additional goal, which is to internalize the externalities of labor and capital to improve risk sharing, in addition to its usual goal - minimizing distortions when financing government expenditures. These two goals drive capital and labor taxes in opposite directions. By balancing these conflicting goals, the steady-state optimal capital income taxes are levied only to remove the negative externality of the capital, and optimal labor income taxes are set to meet the budgetary needs of the government in the long run, despite positive externalities of labor.
    Keywords: Ramsey Taxation, Limited Enforcement
    JEL: D52 E62 H21 H23
    Date: 2012–08–28
  2. By: Federici, Daniela; Parisi, Valentino
    Abstract: The paper analyses the relationship between corporate taxes and exports at firm level. We use an integrated dataset that combines, for the period 2004-2006, survey data(Indagine sulle Imprese Manifatturiere) and company accounts for the manufacturing sector to estimate a Probit and a Tobit model. Our results suggest that export participation as well as export intensity increase with corporate taxation. Consistently with recent developments of the corporate tax incidence theory, this finding can be traced out to the greater ability of exporting firms to shift the tax burden on international markets, compared to domestic firms. Calculation of the average and marginal corporate tax rates uses the methodology recently developed by Egger et al. (2009) which allows deriving firm-specific effective corporate tax rates.
    Keywords: Corporate taxation; exports; effective tax rates
    JEL: H25 F14 H32
    Date: 2012–09–03
  3. By: Thomas Cornelißen (University College, London); Oliver Himmler (Max Planck Institute for Research on Collective Goods, Bonn); Tobias Koenig (Hannover University, Department of Economics)
    Abstract: It is standardly assumed that individuals react to perceived unfairness or norm violations in precisely the same area or relationship where the original offense has occurred. However, grievances over being exposed to injustice may have even broader consequences and also spill over to other contexts, causing non-compliant behavior there. We present evidence that such 'fairness spillovers' can incur large economic costs: A belief that there is unfairness in taxation in the sense that the rich don't pay enough taxes is associated with a twenty percent higher level of paid absenteeism from work.
    Keywords: fairness, Beliefs, Taxation, Work Morale
    JEL: D63 H26 H31
    Date: 2012–08
  4. By: Constantine Angyridis (Department of Economics, Ryerson University); Brennan S. Thompson (Department of Economics, Ryerson University)
    Keywords: negative income taxes, inequality, poverty, heterogeneous agents, Lorenz dominance
    Date: 2012–08
  5. By: Bönke, Timm; Eichfelder, Sebastian; Utz, Stephen
    Abstract: We analyze the distributive justice of the combined burden of income taxes, social security taxes and public transfers on employee households in the United States on the federal level and in six member states. To investigate whether the treatment of families by the aggregate tax and transfer system can be regarded as fair, we compare the equivalent incomes of eight different household types. Using the concepts of horizontal equity and system-inherent equivalence scales, we find evidence for a privileged treatment of families with children and a low market income due to the earned income tax credit (EIC), the child tax credit and the supplemental nutrition assistance program (SNAP). If employment taxes are interpreted as taxes in the proper sense, we obtain a favorable treatment of family households and especially married couples for middle-sized market incomes. For high market incomes, we observe a decreasing privilege for all family types. Regarding state tax and transfer systems, temporary aid for needy families (TANF) substantially increases the observed privilege for low-income families compared to singles, while the analyzed state income taxes are generally in line with the federal tax scheme. Overall, our results imply a significant contradiction in value judgments within the U.S. tax and transfer system. --
    Keywords: horizontal equity,family taxation,distributive justice,tax and transfer system,equivalent income,equivalent income taxation
    JEL: D31 D63 H24
    Date: 2012

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