nep-pub New Economics Papers
on Public Finance
Issue of 2013‒09‒28
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. New Evidence on Taxes and the Timing of Birth By Sara LaLumia; James M. Salle; Nicolas Turner
  2. Tax Policy and Philanthropy: A Primer on the Evidence for the U.S. and its Implications By Jon Bakija
  3. Average Marginal Labor Income Tax Rates under the Affordable Care Act By Casey B. Mulligan

  1. By: Sara LaLumia (Department of Economics, Williams College); James M. Salle (The Harris School University of Chicago and the NBER); Nicolas Turner (Office of Tax Analysis, U.S. Department of Treasury)
    Abstract: This paper uses data from the universe of tax returns filed between 2001 and 2010 to test whether parents shift the timing of childbirth around the New Year to gain tax benefits. Filers have an incentive to shift births from early January into late December, through induction or cesarean delivery, because child-related tax benefits are not prorated. We find evidence of a positive, but very small, effect of tax incentives on birth timing. An additional $1000 of tax benefits increases the probability of a late-December birth by only about 1 percentage point. We argue that the response to tax incentives is small in part because of confusion about eligibility and delays in the issuance of Social Security Numbers for newborns, as well as a lack of control over medical procedures on the part of filers with the highest tax values. We also document a precise shifting of reported self-employment income in response to variation in incentives from the Earned Income Tax Credit due to childbirth. We estimate that this reporting response reduces federal revenue by hundreds of millions of dollars per year.
    Date: 2013–07
  2. By: Jon Bakija (Williams College)
    Abstract: Tax policies in the U.S. increase the incentive to donate to charity among those who itemize their deductions, and most of the tax revenue cost goes to subsidize donations made by relatively high-income people. Several types of empirical evidence which I review here suggest that the donation behavior of high-income people in particular is probably rather responsive to these tax incentives. Economic theory helps clarify what factors affect the optimal tax subsidy for charitable giving, and I summarize some of the key insights. Among other things, the theory suggests that the optimal subsidy is likely to be higher when donation behavior is more responsive to tax incentives, but this is just one important piece of a larger puzzle.
    Keywords: charitable donations, incentive effects of taxation
    JEL: H24 H31 D12
    Date: 2013–06
  3. By: Casey B. Mulligan
    Abstract: The Affordable Care Act includes four significant, permanent, implicit unemployment assistance programs, plus various implicit subsidies for underemployment. Every sector of the economy, and about half of nonelderly adults, is directly affected by at least one of those provisions. This paper calculates the ACA’s impact on the average reward to working among nonelderly household heads and spouses. The law increases marginal tax rates by an average of five percentage points (of employee compensation), on top of the marginal tax rates that were already present before the it went into effect. The ACA’s addition to labor tax wedges is roughly equivalent to doubling both employer and employee payroll tax rates for half of the population.
    JEL: E24 H31 I18 I38
    Date: 2013–08

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