nep-pub New Economics Papers
on Public Finance
Issue of 2013‒06‒24
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Capital Taxation in A Neoclassical Growth Model By Chia-Hui Lu; Been-Lon Chen
  2. Mobility, Taxation and Welfare By Sami Bibi; Jean-Yves Duclos; Abdelkrim Araar
  3. Sales Tax Collections in Nonmetropolitan Communities By Brorsen, B. Wade; Lansford, Notie H.
  4. The Impact of Beverage Taxes on Quantity and Quality of Consumption in France By Silva, Andres; Etile, Fabrice; Boizot-Szantai, Christine; Dharmasena, Senarath

  1. By: Chia-Hui Lu (Department of Economics, National Taipei University); Been-Lon Chen (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: This paper studies the optimal factor tax incidence in a neoclassical growth model with a given share of government expenditure in output. In the Ramsey planner’s optimization, the effect of next period’s capital on government expenditure equals the given share of the marginal product of capital. Capital accumulation reduces the discounted net marginal product of next period’s capital by way of increasing government expenditure. In order to internalize the distortion, it is optimal to tax capital income in the long run.
    Keywords: Optimal factor taxation, efficiency
    JEL: D83 E62 H21 J64
    Date: 2013–05
  2. By: Sami Bibi; Jean-Yves Duclos; Abdelkrim Araar
    Abstract: Income mobility is often thought to equalize permanent incomes and thereby to improve social welfare. The welfare analysis of mobility often fails, however, to account for the cost of the variability of periodic incomes around permanent incomes. This paper assesses the net welfare benefit of mobility by assuming both an aversion to inequality in permanent incomes and an aversion to variability in periodic incomes. The paper further investigates the combined (and comparative) impact of mobility and the tax system (another presumed income equalizer) on the dynamics of income across time and on the inequality of income across individuals. Using panel data, we find that Canada’s tax system limits significantly the redistributive impact of mobility while also lowering considerably the cost of income variability. The permanent income equalizing effect of taxes can reach up to 23 percent of mean income at the higher values of inequality aversion that we use. Globally, the net social welfare effect of both mobility and taxation is (almost always) positive and substantial, often amounting to around 30 percent of mean income. For all choices of parameter values, the tax effect exceeds substantially the net effect of mobility on inequality and social welfare.
    Keywords: Mobility, social welfare, risk, income variability, inequality, permanent income
    JEL: D31 D63 H24
    Date: 2013
  3. By: Brorsen, B. Wade; Lansford, Notie H.
    Abstract: Small communities sometimes increase their local sales tax rate in order to maintain or expand public services. The question addressed here is what is the net effect of changing sales tax rates on revenues from sales taxes? Using both semiparametric and nonparametric regression, we find retail sales to be mostly unaffected by sales tax rates as long as the rate is less than four percent. At rates higher than four percent, however, there is a severe reduction in sales, yet not enough that sales tax revenues would decrease with increased rates. For a penny increase in sales tax rates from four cents, a city can expect their revenues to go up 0.86 cents according to the semiparametric model and 0.74 cents according to the parametric model.
    Keywords: rural development, sales tax, semiparametric estimation, nonmetropolitan, Community/Rural/Urban Development, Public Economics, H2, R51,
    Date: 2013
  4. By: Silva, Andres; Etile, Fabrice; Boizot-Szantai, Christine; Dharmasena, Senarath
    Abstract: Many countries around the World have applied specific food taxes as a way to mitigate increasing obesity. Our study discusses the fact that unit values and prices are not the same when substitutability or complementarity based on quality is concerned. The primary objective of our study is to provide empirical evidence about the relevance of controlling for quality choices within each product category when analyzing the impact of beverage taxes on quantities in a demand system approach. We found that a beverage tax leads to a decrease in quantity and quality demanded, which quality substitution effect is stronger in non-alcoholic beverage more than in alcoholic beverages. Therefore, both, quantity and quality need to be taken into account to understand implications of a beverage tax.
    Keywords: beverage tax, unit value bias, demand systems, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, International Relations/Trade, D10, D12, Q18,
    Date: 2013

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