nep-pub New Economics Papers
on Public Finance
Issue of 2014‒04‒11
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Identifying Tax Implicit Equivalence Scales By Justin van de Ven; Nicolas Herault; Francisco Azpitarte
  2. Are taxes beautiful? A survey experiment on information, tax choice and perceived adequacy of the tax burden By Abbiati, Lorenzo; Antinyan, Armenak; Corazzini, Luca
  3. Fiscal Equalization, Tax Salience, and Tax Competition By Martin Altemeyer-Bartscher
  4. Sorting Charles Tiebout: The Construction and Stabilization of Postwar Public Good Theory By John D. Singleton
  5. Experience in Public Goods Experiments By Anna Conte; M. Vittoria Levati; Natalia Montinari
  6. Assessing future sustainability of french public finances By Jérôme Creel; Paul Hubert; Francesco Saraceno

  1. By: Justin van de Ven (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; National Institute of Economic and Social Research); Nicolas Herault (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Francisco Azpitarte (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Brotherhood of St Laurence)
    Abstract: This paper describes a simple and tractable method for identifying equivalence scales that reflect the value judgements implicit in a tax and benefits system. The approach depends upon two assumptions that are standard in the literature concerned with inequality and tax progressivity, in addition to a functional description for transfer payments that can be estimated using common micro-data sources. We use this approach to evaluate tax implicit equivalence scales for the UK transfer system that applied in April 2009. The tax implicit scales that we identify for the UK vary positively with tax unit size and are decreasing in gross earnings, reflecting recent econometric estimates based on consumption data. We conclude by discussing a range of potential applications for the proposed tax implicit scales.
    Keywords: Equivalence scale, taxation, base dependence
    JEL: D31 H23 I38
    Date: 2014–03
  2. By: Abbiati, Lorenzo; Antinyan, Armenak; Corazzini, Luca
    Abstract: We report results from a survey experiment aimed at testing whether providing information on the national public expenditure to the taxpayers and whether involving them in the process of allocating tax revenues over public goods influence the level of the adequate tax rate - the fraction of income that individuals consider adequate to pay as taxes. We find that providing information on public expenditure does not influence the level of the adequate tax rate. On the contrary, the level of the adequate tax rate substantially increases when taxpayers can get to choose the public goods to finance through their taxation. --
    Keywords: Tax Choice,Adequate Tax Rate,Survey Experiment
    JEL: H24 H50 D31
    Date: 2014
  3. By: Martin Altemeyer-Bartscher
    Abstract: Jurisdictions that engage in inter-regional tax competition usually try to attenuate competitive pressures by substituting salient tax instruments with hidden ones. On this effect, we investigate the efficiency consequences of inter-regional tax competition and fiscal equalization in a federal system when taxpayers fail to optimally react on shrouded attributes of local tax policy. If the statuary tax rate is a relatively salient instrument and taxpayers pay low attention to the quality and the frequency of tax enforcement, the underlying substitution of tax instruments with the aim of reducing the perceived tax price may suppress the under-exploitation of tax bases that is typically triggered by fiscal equalization.
    Keywords: fiscal equalization, tax salience, tax competition, fiscal federalism, tax-cut-cum-base-broadening policy
    JEL: H77 H22 H30
    Date: 2014–03
  4. By: John D. Singleton
    Abstract: A substantial and diverse literature in economics traces its intellectual roots to Charles Tiebout's 1956 article, "The Pure Theory of Local Expenditure." Its present recognition frequently attributed to originating the idea of "voting with your feet," however, contrasts sharply with its obscurity during Tiebout's academic career, which was tragically cut short by his passing in 1968. Penned as a qualification to Paul Samuelson's "pure theory," the article failed to influence the stabilization of postwar public good theory, despite Tiebout's engagement with key figures in its construction. Moreover, his death preceded the application of its central mechanism to public, urban, and environmental topics via hedonic, sorting, and computational general equilibrium models. Viewed in this way, the history of Tiebout's article, and thereby the history of public economics, has remarkably little to do with Tiebout himself. Professionally, though, the article reflected Tiebout's lifelong interest in issues of local economies and governance. The social and political context of urban sprawl and political fragmentation that accompanied the rapid growth of metropolitan area, such as Chicago, Los Angeles, and Seattle, raised novel questions in local public finance for researchers before a knowledge community existed to credit their work. For Tiebout, it stimulated his collaboration with Vincent Ostrom and Robert Warren and later involvement in the burgeoning interdisciplinary field of regional science.
    Keywords: public goods, Charles Tiebout, Tiebout sorting, James Buchchanan, Richard Musgrave, Paul Samuelson
    Date: 2013
  5. By: Anna Conte (Max Planck Institute of Economics, Jena, and WBS, University of Westminster, EQM Department); M. Vittoria Levati (Max Planck Institute of Economics, Jena, and University of Verona, Department of Economics); Natalia Montinari (Max Planck Institute of Economics, Jena, and Lund University, Department of Economics)
    Abstract: We use information on students' past participation in economic experiments, as stored in our database, to analyze whether behavior in public goods games is affected by experience (i.e., previous participation in social dilemma-type experiments) and history (i.e., participation in experiments of a different class than the social dilemma). We have three main results. First, at the aggregate level, the amount subjects contribute and expect others to contribute decrease with experience. Second, a mixture model reveals that the proportion of unconditional cooperators decreases with experience, while that of selfish individuals increases. Finally, history also influences behavior, although to a lesser extent than experience. Our findings have important methodological implications for researchers, who are urged to control for subjects' experience and history in their experiments if they want to improve the external validity and replicability of their results.
    Keywords: Public goods experiments, Social preferences, Mixture models, Experience, History
    JEL: C35 C51 C72 H41
    Date: 2014–03–31
  6. By: Jérôme Creel (OFCE); Paul Hubert; Francesco Saraceno (OFCE)
    Abstract: This paper contributes to the debate on the French public finances’ consolidation by investigating the long-term sustainability of France’s fiscal position. We trace the historical trends of government’s tax receipts and expenditures. We find that while the level of public expenditure in France is larger than in the rest of the Euro Area (mostly because of public wages and social benefits), its trend is comparable to its neighbours. Net lending is also under control, thanks to the high levels of taxation, so that we see no real risk of future unsustainability. However, the French tax system is unfair, is not sufficiently progressive, and is too complex. The paper then proceeds to assess the future of France’s public finances on the basis of the current debate on the Euro Area fiscal rules. We report two analyses – theoretical and empirical – that project the inflation rate and output gap paths for the next twenty years. We finally assess fiscal rules on this ground. The ‘fiscal compact’ fares rather poorly compared to the alternative rules that we assess.
    Keywords: deficits; dettes; dettes management; fiscales rule; fiscale compact; golden rule
    JEL: E62 E63 H61
    Date: 2013–07

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