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on Public Finance |
| By: | Apps, Patricia (University of Sydney); Rees, Ray (University of Munich) |
| Abstract: | This paper presents for the first time the properties of optimal piecewise linear tax systems for two-earner households, based on joint and individual incomes respectively. A key contribution is the analysis of the interaction of second earner wage differences, variation in prices of bought-in inputs into household production in the form of child care, and domestic productivity differences as determinants of across-household heterogeneity in second earner labour supply. The analysis highlights the importance of the elasticity of substitution between parental and non-parental child care in determining the relationship between utility and income across households. A central result is that taking account of a richer and more realistic specification of household time use widens the set of cases in which individual taxation is welfare-superior to joint taxation. |
| Keywords: | optimal taxation, time allocation, household production, child care, inequality, labour supply |
| JEL: | J22 H21 H24 H31 D13 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6823&r=pub |
| By: | Carolina Torres |
| Abstract: | This paper considers the influence of taxes on the financial incentive to invest in human capital and explores the tax treatment of private investment by individuals and employers in post-compulsory education and lifelong learning in 31 OECD countries, India and South Africa. The paper describes targeted personal, corporate and value added tax measures related to education and training and analyses them in terms of their impacts on the incentive to acquire skills and their distributional effects. The desirability of different forms of tax relief for skills formation is examined from the point of view of efficiency, equity and administrative simplicity within the broader context of fiscal policy and the role of government in skills formation beyond compulsory education. |
| Keywords: | human capital, tax policy, OECD countries, skills formation, tax incentives, education finance |
| JEL: | H21 H24 H25 I22 J24 |
| Date: | 2012–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ctpaaa:13-en&r=pub |
| By: | Florian Scheuer |
| Abstract: | In many countries, taxes on businesses are less progressive than labor income taxes. This paper provides a justification for this pattern based on adverse selection that entrepreneurs face in credit markets. Individuals choose between becoming entrepreneurs or workers and differ in their skill in both of these occupations. I find that endogenous cross-subsidization in the credit market equilibrium results in excessive (insufficient) entry of low-skilled (high-skilled) agents into entrepreneurship. This gives rise to a corrective role for differential taxation of entrepreneurial profits and labor income. In particular, a profit tax that is regressive relative to taxes on labor income restores the efficient occupational choice. |
| JEL: | D82 E22 E44 G11 G14 H21 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18406&r=pub |
| By: | Julio López-Laborda (Department of Public Economics, University of Zaragoza); Antoni Zabalza (Department of Economic Analysis, University of Valencia) |
| Abstract: | The purpose of this paper is to evaluate the efficiency cost of transfers. To this end, we develop a model of individual demand decisions about the provision of a regional public good that encompasses a continuum of tax/transfers scenarios to finance regional public expenditure. We assume that individuals have identical quasi-linear preferences defined over private consumption and the regional public good, that endowment income varies between individuals and regions and that regions have different predetermined sizes. We show that, despite its simplicity, this model is capable of discriminating the efficiency properties of the different scenarios considered, and that the substitution of transfers for own regional taxes always raises the provision of the regional public good. Our model yields the so called “flypaper effect” with no need to appeal to the existence of “fiscal illusion” by the part of the individual. We nevertheless find that “fiscal illusion” increases the elasticity of public good provision with respect to transfers, and we suggest two potentially refutable hypotheses to identify the existence of this phenomenon. |
| Keywords: | Regional finance, taxes, transfers, fiscal illusion, flypaper effect |
| Date: | 2012–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper1229&r=pub |
| By: | Quentin Frère (CESAER - Centre d'Economie et Sociologie appliquées à l'Agriculture et aux Espaces Ruraux - INRA); Matthieu Leprince (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes I - Université de Caen Basse-Normandie); Sonia Paty (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon) |
| Abstract: | The purpose of this paper is to assess the effects of inter-municipal fiscal cooperation on municipal public spending, based on the French experience. We estimate a model of municipal spending choice using panel data and spatial econometrics for municipalities over the period 1994-2003. We provide two main results. First, inter-municipal cooperation has no significant impact on the level of municipal public spending, which suggests that cooperation does not achieve its goal of reducing municipal spending by the sharing of local responsibilities. Second, there are no spending interactions between municipalities belonging to the same inter-municipal community. This is in line with the goal assigned to cooperation in terms of internalization of spatial externalities. However, our results show that benefit spillovers remain highly significant outside inter-municipal communities, suggesting that inter-municipal communities remain too small. |
| Keywords: | public spending ; local governments ; inter-municipal cooperation ; panel data |
| Date: | 2012–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00730555&r=pub |
| By: | Verbist, G. (Gerlinde); Matsaganis, M. (Manos) |
| Abstract: | Welfare states provide social benefits in cash and in kind. Cash benefits are income transfers, such as retirement pensions, family and unemployment benefits and social assistance. Benefits in kind are commodities directly transferred to recipients at zero or below-market prices (Barr 2012). In Europe, benefits in kind are usually services, such as health, education, child care and care for the elderly. For example, hospital care in most countries is provided either free of charge or at near-zero prices (at the point of use). User fees are even rarer in the case of primary and secondary education: enrolment is compulsory up to a certain age, while tuition is provided free of charge to all children attending publicly funded schools, irrespective of family income. Moreover, child care is often heavily subsidised; kindergartens are run by the state (most commonly local governments) or government-supervised private organisations, while user fees, where applicable, are usually income-related (in the sense that higher-income families pay higher fees, while lower-income ones pay less or are fully exempted). Elderly care may also be available on similar terms; besides, several countries have developed long-term care insurance schemes, to cater for the future needs of an ageing population. ... |
| Date: | 2012–07 |
| URL: | http://d.repec.org/n?u=RePEc:aia:ginidp:dp53&r=pub |