nep-pub New Economics Papers
on Public Finance
Issue of 2014‒08‒09
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Effective Corporate Taxation, Tax Incidence and Tax Reforms: Evidence from OECD Countries By Salvador Barrios; Gaetan Nicodeme; Antonio Jesus Sanchez Fuentes
  2. Taxation trends in the European Union: 2014 edition By European Commission
  3. Income Tax and retirement Schemes By Philippe Choné; Guy Laroque
  4. Cross-base tax elasticity of capital gains By Jacob, Martin
  5. Capital gains taxes and asset prices: The impact of tax awareness and procrastination By Eichfelder, Sebastian; Lau, Mona
  6. Green Technology and Optimal Emissions Taxation By Stuart McDonald; Joanna Poyago-Theotoky
  7. Strictness of tax compliance norms: A factorial survey on the acceptance of inheritance tax evasion in Germany By Abraham, Martin; Lorek, Kerstin; Richter, Friedemann; Wrede, Matthias
  8. Social Security's Financial Outlook: The 2014 Update in Perspective By Alicia H. Munnell

  1. By: Salvador Barrios (Joint Research Center of the European Commission); Gaetan Nicodeme (European Commission); Antonio Jesus Sanchez Fuentes (Universidad Complutense Madrid)
    Abstract: The present study provides estimates of the Effective Marginal Tax Rates (EMTRs) for a sample of 17 OECD countries and 11 manufacturing sectors in a single framework encompassing capital, labour and energy taxes. Our cross-country/cross-sector approach allows us comparing the incentives provided by the tax systems and gauging the effects of tax changes taking explicitly into account the possible substitution between factors as well as their tax incidence. Our results suggest that the OECD tax systems provide different incentives for manufacturing activity across countries and that tax systems are relatively neutral with respect to the sectoral composition of manufacturing activities. The impact of potential tax increases on firms´ activity is found to be most attenuated when shifted towards consumers and/or employees rather than energy consumption and/or capital investors. These results are robust to alternative hypotheses regarding the tax incidence parameters, elasticity of substitution between factors and mark-up on final prices. In addition, policy strategies favouring tax increases on energy consumption and lowering taxes on labour can substantially reduce the EMTRs and thus yield substantial efficiency gains for firms. These reforms should in some instances be ambitious enough to produce desired effects on firms’ EMTRs, however.
    Keywords: Taxation; Tax incidence; Effective Taxation
    JEL: H20 H22 H24 H25
    Date: 2014–07
  2. By: European Commission
    Abstract: This report contains a detailed statistical and economic analysis of the tax systems of the Member States of the European Union, plus Iceland and Norway, which are Members of the European Economic Area. The data are presented within a unified statistical framework (the ESA95 harmonised system of national and regional accounts), which makes it possible to assess the heterogeneous national tax systems on a fully comparable basis.
    Keywords: European Union, taxation
    JEL: H23 H24 H25 H27 H71
    Date: 2014–07
  3. By: Philippe Choné (CREST); Guy Laroque (Sciences-Po and UCL)
    Abstract: This article aims at understanding the interplay between pension schemes and tax instruments. The model features extensive labor supply in a stationary environment with overlapping generations and perfect financial markets. Compared with the reference case of a pure taxation economy, we find that taxes become more redistributive when the pension instrument is available, while pensions provide incentives to work
    Date: 2014–03
  4. By: Jacob, Martin
    Abstract: This paper studies the cross-base tax elasticity of capital gains realizations to labor income taxes when capital gains are taxed at a separate proportional tax rate. Using a longitudinal panel of over 265,000 individuals in Sweden, this paper shows in a regression kink design that labor income taxes affect capital gains at the extensive and intensive margins. An increase in the marginal labor income tax rate increases the likelihood of realizing capital gains and the amount of realized capital gains. One implication of this result is that the excess burden of labor income taxation is affected by cross-base tax elasticities. --
    Keywords: Capital Gains,Cross-Base Elasticity,Income Taxes
    JEL: H21 H24
    Date: 2014
  5. By: Eichfelder, Sebastian; Lau, Mona
    Abstract: We argue that the impact of capital gains taxation on asset pricing depends on the tax awareness of market participants. While institutional investors should be generally wellinformed about tax regulations, private investors have only limited tax knowledge and resources. As a result, market reactions on tax law changes may be delayed if a considerable fraction of market participants is not fully tax-aware. In line with our argument, we find evidence that the introduction of a previously announced German flat tax on private capital gains in 2009 resulted in a temporarily strong and significant increase of trading volumes, daily returns and asset prices. Our research implies that tax law changes provide an opportunity for well-informed investors to generate arbitrage benefits. Corresponding to our estimate, the capital gains tax resulted in an increase demand for shares of 160 % as well as in an price surplus of about 7.4 % within the last two trading days 2008. --
    Keywords: capital gains tax,asset pricing,tax awareness,tax arbitrage
    JEL: G1 H25 M41
    Date: 2014
  6. By: Stuart McDonald (School of Economics, The Universty of Queensland); Joanna Poyago-Theotoky (School of Economics, La Trobe University Rimini Centre for Economic Analysis (RCEA))
    Abstract: We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and effectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover. In the case of R&D input spillovers (where only knowledge spillovers are accounted for), the optimal emissions tax required to stimulate R&D is always higher than when there is an R&D output spillover (where abatement and knowledge spillovers exist simultaneously). We also find that optimal emissions taxation and cooperative R&D complement each other when R&D spillovers are small, leading to lower emissions.
    Keywords: Environmental R&D, Green Technology, R&D Spillover, Emissions Tax
    JEL: H23 L11 Q55
    Date: 2014–06
  7. By: Abraham, Martin; Lorek, Kerstin; Richter, Friedemann; Wrede, Matthias
    Abstract: Using the example of the inheritance tax, this paper examines whether and how the strictness of tax compliance norms depends on the interrelation between tax objectives, tax design, and taxed behavior. Building on the literature on tax evasion, optimal inheritance taxation, family economics, and social norms, the paper hypothesizes that a larger non-declared amount of transfer decreases the acceptability of tax evasion and that both an asset with emotional value and a higher degree of kinship increase the acceptance of evasion. Utilizing a survey with an experimental design on the acceptance of inheritance tax evasion that was conducted in Germany in 2012, the paper confirms these hypotheses empirically. The results indicate that violating a compliance norm is justifiable if the tax objectives are not infringed upon by the evasion or if the tax design is not considered useful to accomplish the aim of the tax. In contrast, the norm violation is less acceptable, if the underlying goal is at stake. --
    Keywords: tax compliance,social norms,tax evasion,inheritance tax
    JEL: H21 H24 H26
    Date: 2014
  8. By: Alicia H. Munnell
    Abstract: The 2014 Trustees Report shows little change from last year: o Social Security's 75-year deficit rose modestly to 2.88 percent of payroll. o But the deficit as a percent of GDP is still 1 percent. o And trust fund exhaustion is still 2033, after which payroll taxes still cover about three quarters of promised benefits. The shortfall is manageable but, with the deficit rising to about 4 percent in two decades, action should be taken soon to avoid larger tax/benefit changes later. And the disability insurance program needs immediate attention, as its trust fund is expected to be exhausted in 2016.
    Date: 2014–07

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