nep-pub New Economics Papers
on Public Finance
Issue of 2013‒01‒19
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Happy Taxpayers? Income Taxation and Well-Being By Alpaslan Akay; Olivier Bargain; Mathias Dolls; Dirk Neumann; Andreas Peichl; Sebastian Siegloch
  2. Non-linear dividend tax and dynamics of the firm By Seppo Kari; Jussi Laitila
  3. Capital gains taxation and the cost of capital: evidence from unanticipated cross-border transfers of tax bases By Harry Huizinga; Johannes Voget; Wolf Wagner
  4. The fiscal and distributional impact of possible tax reforms in the Netherlands By Vos, Klaas de
  5. Peoples' views of taxation in Africa: A review of research on determinants of tax compliance By Odd-Helge Fjeldstad; Collette Schulz-Herzenberg; Ingrid Hoem Sjursen
  6. Property Tax System in India: Problems and Prospects of Reform. By M. Govinda Rao
  7. The Changing of the Guards: Can Physicians Contain Social Insurance Costs? By Markussen, Simen; Røed, Knut; Røgeberg, Ole J.
  8. Unemployment Insurance, Wage Dynamics and Inequality over the Life Cycle By Bingley, Paul; Cappellari, Lorenzo; Westergård-Nielsen, Niels C.

  1. By: Alpaslan Akay; Olivier Bargain; Mathias Dolls; Dirk Neumann; Andreas Peichl; Sebastian Siegloch
    Abstract: This paper offers a first empirical investigation of how labor taxation (income and payroll taxes) affects individuals' well-being. For identification, we exploit exogenous variation in tax rules over time and across demographic groups using 26 years of German panel data. We find that the tax effect on subjective well-being is significant and positive when controlling for income net of taxes. This interesting result is robust to numerous specification checks. It is consistent with several possible channels through which taxes affect welfare including public goods, insurance, redistributive taste and tax morale.
    Keywords: subjective well-being, taxation, public goods
    JEL: H21 H41 I38
    Date: 2012
  2. By: Seppo Kari; Jussi Laitila
    Abstract: This paper analyses the implications of a non-linear dividend tax in a life-cycle model of the firm. In the model new firms first enter markets, then grow, financing from retained earnings and finally distribute their profits in the steady state. We find that under a non-linear tax the owners prefer a smooth flow of dividends, which encourages the firms to start distributions right from the beginning. This slows down investments and leads to delayed growth of production. There is, however, an opposing effect resulting from an increase in the start-up size of the firm, which speeds growth. Simulations nevertheless show that a revenue-neutral switch from a linear to a progressive tax exacerbates production losses. We further find that this distortion can be substantially reduced by carrying forward unused tax allowances with interest.
    Keywords: dividend tax, progressive tax, nucleus theory, firm behavior
    JEL: H32 H24 G35
    Date: 2012–12–07
  3. By: Harry Huizinga (CentER and EBC, Tilburg University and CEPR); Johannes Voget; Wolf Wagner (CentER and EBC, Tilburg University, Duisenberg School of Finance)
    Abstract: In a cross-border takeover, the tax base associated with future capital gains is transferred from target shareholders to acquirer shareholders. Crosscountry differences in capital gains tax rates enable us to estimate the discount in target valuation on account of future capital gains. A one percentage point increase in the capital gains tax rate reduces the value of equity by 0.225%. The implied average effective tax rate on capital gains is 7% and it raises the cost of capital by 5.3% of its no-tax level. This indicates that capital gains taxation is a significant cost to firms when issuing new equity.
    Keywords: Capital gains taxation, Cost of capital, International takeovers, Takeover premium
    JEL: G32 G34 H25
    Date: 2012
  4. By: Vos, Klaas de
    Abstract: This paper uses the tax-benefit microsimulation model EUROMOD to assess how three types of tax reform would affect the state budget and the income distribution in the Netherlands. After briefly introducing the Dutch tax system and the case for and against these reforms, we investigate the effects of (1) introducing a flat income tax rate, (2) reducing the mortgage interest deduction and (3) shifting the state pension contribution to income tax, and of combining these reforms. Notably, the analysis does not include possible effects of these reforms on, e.g., the labour market and/or the housing market, but assesses the ceteris paribus effects of the reforms on the state budget and on poverty and inequality.Depending on the choice of the various parameters of the reforms both the budgetary and the distributional effects may vary widely. We show that the budget deficit may increase or decrease in combination with both increases and decreases in inequality and poverty. So, an optimal tax reform could be chosen depending on the preferences with respect to the budget and the income distribution.
    Date: 2012–12–18
  5. By: Odd-Helge Fjeldstad; Collette Schulz-Herzenberg; Ingrid Hoem Sjursen
    Abstract: What are the key determinants of taxpayer compliance? And which features of citizen-state relations govern attitudes and behaviour regarding taxation? This paper examines the analytical foundation, methodological approaches and key findings of available empirical literature on taxpayer behaviour in Africa. Understanding how citizens perceive and experience taxation may provide an essential diagnostic of the political realities for tax reform. Attempts to broaden the tax base require insights into how citizens experience and perceive the tax system, whether people perceive they are paying taxes or not, what they eventually pay, their views on tax administration and enforcement, and whether and how their tax behaviour is correlated with how they perceive the state. Attitude and perception surveys of current and potential taxpayers may also help to identify perceived weaknesses of the tax system, and enable tax authorities to focus attention efficiently on high-risk categories of taxpayers.
    Keywords: Taxation, Tax behaviour, Compliance, Evasion, Fiscal exchange, Surveys
    Date: 2012
  6. By: M. Govinda Rao (National Institute of Public Finance and Policy)
    Date: 2013–01
  7. By: Markussen, Simen (Ragnar Frisch Centre for Economic Research); Røed, Knut (Ragnar Frisch Centre for Economic Research); Røgeberg, Ole J. (Ragnar Frisch Centre for Economic Research)
    Abstract: Based on administrative data from Norway, we examine the extent to which family doctors influence their clients' propensity to claim sick pay and disability benefits. The analysis is based on exogenous shifts of family doctors occurring when physicians quit, retire, or for other reasons sell their patient lists to other doctors. Our key finding is that family doctors have significant influence on their clients' benefit claims. We conclude that it is possible for family doctors to contain social insurance costs to some extent, and that there is a significant variation across doctors in the way they do so.
    Keywords: sick pay, disability insurance, absence certification, gatekeepers
    JEL: H55
    Date: 2013–01
  8. By: Bingley, Paul (SFI - Danish National Centre for Social Research); Cappellari, Lorenzo (Università Cattolica del Sacro Cuore); Westergård-Nielsen, Niels C. (Aarhus University)
    Abstract: We investigate the relationship between life cycle wages and individual membership of unemployment insurance schemes in Denmark. We separate permanent from transitory wages and characterise them using membership of unemployment insurance funds. We find that unemployment insurance is associated with lower wage growth heterogeneity over the life cycle and greater wage instability, changing the nature of wage inequality from permanent to transitory. While we are in general unable to formally test for moral hazard against adverse selection into unemployment insurance, robustness checks suggest that moral hazard is the relevant interpretation.
    Keywords: unemployment insurance, wage dynamics, wage inequality, wage instability
    JEL: J31 J65
    Date: 2013–01

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