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on Public Finance |
| By: | Luca Gandullia (University of Genoa, Italy) |
| Abstract: | The aim of the paper is to review the economic theory of tax assignment across levels of government and the international experience in the use of direct taxes – personal income taxes and taxes on profits and on business value added – for fiscal decentralization. We highlight that as for other options of local taxation there are merits but also drawbacks in the use of direct taxes as a source of financing for sub-central governments and so the final choice about their use or not is a matter of judgment and depends on the political priority to be attached to different objectives, such as efficiency, equity, accountability, tax competition, administrative feasibility and revenue adequacy. |
| Keywords: | direct taxes, fiscal decentralization, tax assignment |
| JEL: | H24 H25 H71 H73 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:gea:wpaper:6/2012&r=pub |
| By: | Wojciech Kopczuk |
| Abstract: | In this chapter, I review empirical and theoretical literature on taxation of intergenerational transfers (estates, bequests, inheritances, inter vivos gifts) and wealth. The main message may be summarized as follows. Empirical evidence on bequest motivations and responses to estate taxation is spotty and much remains be done, but what we know points in the direction of (1) mixed motives (2) heterogeneity of preferences and (3) importance of retaining control over wealth. These patterns are important for normative analysis of taxation toward the top of the distribution. Theoretical work should further focus on understanding implications of inequality of inherited wealth: the topic that has been neglected in the past, even though it is closely related to — more carefully studied, but arguably much less important in practice — externalities from giving. Potential externalities from wealth accumulation and concentration are yet to be seriously addressed. |
| JEL: | D31 E21 H2 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18584&r=pub |
| By: | Laszlo Goerke |
| Abstract: | A strictly risk-averse individual with an exogenous gross income in period one can acquire human capital in the same period and evade taxes. Period-two income rises with educational investments in period one and can also be hidden from tax authorities. It is shown that a greater tax deductibility of educational investments and higher individual ability induce a positive correlation between tax evasion and educational investments in period two, whereas the relationship in period one is ambiguous. These theoretical predictions can explain diverse empirical findings on the correlation between education and tax evasion. |
| Keywords: | human capital, income tax, tax evasion |
| JEL: | H24 H26 I20 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_3719&r=pub |
| By: | Hansson, Åsa (Research Institute of Industrial Economics (IFN)); Porter, Susan (McIntire School of Commerce); Perry Williams, Susan (McIntire School of Commerce) |
| Abstract: | Economists and political scientists have long been interested in factors that affect the statutory tax rate on businesses set by federal governments. In this study, we examine the impact of political and economic factors on several measures of tax rates and tax incentives offered across 19 developed countries for the years 1979 through 2005. Our results indicate that while economic conditions such as openness, strategic interaction, budget constraints, economic downturns and an aging population all influence the rate of tax set by governments, the political structure of the federal government has a significant impact in the form of economic stimulus given. Importantly, our results suggest that different economic and political structures affect the level of incentives offered beyond those factors that affect the level of tax rates. These results are relevant to the current tax debate facing many governments as they consider implementing new policies to attract foreign direct investment and retain and grow domestic business. <p> The impact of the political structure on the ability to enact legislation is significant after controlling for economic factors. This indicates that as the marketplace continues to become more international, it will become increasingly important for governments to find opportunities to work within their systems to enact legislation that enables their business community to compete internationally. |
| Keywords: | Corporate tax rates; Tax competition; Political structure |
| JEL: | D72 H25 H73 |
| Date: | 2012–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0942&r=pub |
| By: | Spencer Bastani; Håkan Selin |
| Abstract: | Recent microeconometric studies of taxpayer’ responsiveness to taxation have shown that intensive margin labor supply and earnings elasticities typically are modest and sometimes equal to zero. However, a common view is that long-run responses might still be large since micro-estimates are downward biased owing to optimization frictions. In this paper we estimate the taxable income elasticity at a very large kink point of the Swedish tax schedule using the bunching method. During the period of study the change in the log net-of-tax rate reached a maximum value of 45.6%. Interestingly, we obtain a precise elasticity estimate of zero for wage earners at this large kink. The size of the kink allows us to derive tighter bounds on the long-run elasticity than previous studies. If wage earners on average tolerate 1% of their disposable income in optimization costs, the upper bound on the long-run taxable income elasticity is 0.39. We also evaluate the performance of the bunching estimator by performing Monte Carlo simulations. |
| Keywords: | bunching, taxable income, bounds, optimization frictions |
| JEL: | H21 H24 J22 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_3865&r=pub |