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

  1. Are Environmentally Related Taxes Effective? By Sebastian Miller; Mauricio Vela
  2. Taxation and Labour Supply: Evidence from a Representative Population Survey By Bernd Hayo; Matthias Uhl
  3. Inheritance Taxation in Sweden, 1885–2004: The Role of Ideology, Family Firms and Tax Avoidance By Henrekson, Magnus; Waldenström, Daniel
  4. Local Public Finances and Municipal Reform in Finland By Christophe André; Clara García
  5. Ideology and Taxation in Latin America By Ernesto H. Stein; Lorena Caro
  6. Tax Reforms in Latin America in an Era of Democracy By Diego Focanti; Mark Hallerberg; Carlos Scartascini
  7. Measuring the Political Economy of Tax Lawmaking: A Methodology and Evidence from Argentina By Javier Alvaredo; Alejandro Bonvecchi; Ernesto Calvo; Maximiliano Castillo; Juan Carlos Gomez
  8. Tax Compliance and Enforcement in the Pampas: Evidence from a Field Experiment By Lucio Castro; Carlos Scartascini

  1. By: Sebastian Miller; Mauricio Vela
    Abstract: This paper focuses on the question of whether the magnitude of long-established environmentally related taxes (ERT) is related to countries environmental performance. While environmental taxes efficiencies have previously been discussed, those taxes contribution to reducing pollution and improving environmental quality has not been fully explored. This paper therefore analyzes the effectiveness of environmental taxes by examining the environmental performance of 50 countries from all regions in association with the amount of revenues from environmentally related taxes each country collects. Using a cross-section regression and a panel dynamic regression, the paper finds that countries with higher revenues from these types of taxes also exhibit higher reductions in CO2 emission, PM10 emissions, and energy consumption and production from fossil sources.
    JEL: H23 Q53 Q58
    Date: 2013–11
  2. By: Bernd Hayo (University of Marburg); Matthias Uhl (University of Marburg)
    Abstract: We study the influence of taxation on labour supply using a specifically designed representative survey of the German population. First, we investigate whether taxes generally matter for the labour supply decisions of our respondents. Around 41 per cent report taking taxes into consideration, which implies that the majority of the German population appears unresponsive to taxation. Second, we look at self-reported labour supply adjustments following a recently enacted payroll tax change. Only around 12 per cent of all respondents report an actual labour supply response, but we find evidence of an income, as well as a substitution, effect of the tax change. Our conclusion is that effects of taxes on labour supply in Germany are likely small. We analyse the correlation with economic and socio-demographic variables, and find that the self-employed are relatively more sensitive to taxation and that low interest rates reduce incentives for an expansion of the labour supply.
    Keywords: Taxation, Labour supply, Representative population survey Germany
    JEL: E62 H30 J22
    Date: 2014
  3. By: Henrekson, Magnus (Research Institute of Industrial Economics); Waldenström, Daniel (Uppsala Center for Fiscal Studies)
    Abstract: This paper studies the evolution of the modern Swedish inheritance taxation from its introduction in 1885 to its abolishment in 2004. Our contribution is twofold. First, we compute annual effective inheritance tax rates for differently sized bequests and different types of inherited assets (non-firm wealth and family firm equity), ac-counting for all relevant exemptions, deductions and valuation discounts. Second, we try to account for the changes in inheritance taxation. Ideology rather than mass mobili-zation or revenue maximization appears to drive the sharp tax increases of the 1930s through the 1960s. We document increased opportunities for tax planning for the wealthy, in particular a series of drastic tax cuts on inherited family firms from the 1970s onwards. This rise of avoidance opportunities for the rich, while more and more middle-class heirs paid notable inheritance taxes, contributed to a loss of legitimacy for the tax and its ultimate repeal in 2004
    Keywords: Gift tax; Inheritance tax; Estate tax; Tax avoidance; Excess burden; Entre-preneurship; Ownership transfers of family firms
    JEL: D31 H20 K34
    Date: 2014–07–06
  4. By: Christophe André; Clara García
    Abstract: Finnish municipalities enjoy ample fiscal autonomy and provide or arrange the provision of a large share of public services. In recent years, their spending and debt has been increasing steadily, especially because of population ageing and increases in the cost of health care and social services. Furthermore, small municipalities are often struggling to align service provision with national standards. The government has launched a reform to create more efficient municipalities through voluntary mergers. Both international experience and costs per capita across Finnish municipalities suggest an optimal size for municipalities of over 20 000 inhabitants, at least outside remote areas. As mergers are to be voluntary, the outcome of the reform remains uncertain. If merger plans prove insufficient to achieve efficient public service provision, the government could impose mergers on smaller municipalities, especially around the main urban areas. Responsibilities of smaller municipalities could be scaled back in all functions where economies of scale and scope can be achieved. Policies also need to be flexible enough to allow restructuring of services after mergers. Partnerships between public or private entities to provide services could be developed further in some areas. Finally, the tax structure and fiscal rules should be enhanced to ensure long-term fiscal sustainability. This Working Paper relates to the 2014 OECD Economic Survey of Finland ( finland.htm). Les finances publiques locales et la réforme des communes en Finlande Les communes finlandaises jouissent d’une grande autonomie budgétaire et fournissent elles-mêmes, ou font fournir, une large part des services publics. Ces dernières années, leurs dépenses et leur endettement ont augmenté de manière sensible, en particulier à cause du vieillissement de la population et de la hausse des soins de santé et des services sociaux qui en découle. En outre, les petites communes ont souvent du mal à fournir des services à la hauteur des normes nationales. Le gouvernement a lancé une réforme destiné à créer des communes plus efficientes grâce à des fusions volontaires. Si l’on se fonde sur l’expérience internationale comme sur les coûts par habitant dans les communes finlandaises, il apparaît que pour une commune, la taille optimale correspondrait à une population supérieure à 20 000 habitants, au moins en dehors des zones isolées. Comme les fusions vont être volontaires, l’issue de la réforme reste incertaine. Si les projets de réformes ne suffisent pas à déboucher sur une prestation efficiente de services publics, le gouvernement pourrait imposer des fusions aux communes les plus petites, en particulier autour des grandes zones urbaines. Les responsabilités des communes les plus petites pourraient être réduites dans tous les domaines où il est possible d’obtenir des économies d’échelle et de portée. L’action publique doit par ailleurs être suffisamment souple pour permettre une restructuration des services après les fusions. Des partenariats entre entités publiques et privées pour la fourniture de services pourraient être développés dans certains domaines. Enfin, la structure fiscale et les règles budgétaires devraient être améliorées pour garantir la viabilité budgétaire à long terme. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Finlande, 2014 ( ique-finlande.htm).
    Keywords: fiscal equalisation, fiscal federalism, fiscal rules, efficiency, decentralisation, local taxation, municipal mergers, local government, public services, fiscalité locale, péréquation, règles budgétaires, fusions municipales, gouvernement local, fédéralisme budgétaire, Finlande, décentralisation, efficacité, services publics
    JEL: H11 H21 H41 H42 H71 H72 H74 H75 H77
    Date: 2014–06–03
  5. By: Ernesto H. Stein; Lorena Caro
    Abstract: This paper examines the impact of ideology on tax revenues in Latin America, using a panel of 17 countries from 1990 to 2010. As a first approach, a fixed- effects model is used to identify the impact of ideology on taxation; left-leaning governments are associated with increases in total tax revenues and income tax revenues of 2. 1 and 1. 3 percent of GDP, respectively. There is no effect on revenues from VAT or social security taxes. To deal with endogeneity problems, an event study and a difference in difference methodology are used to track the behavior of revenues around the time of the shifts to the left. Tax revenues and income tax revenues increase by 1. 5 and 0. 8 percent of GDP when comparing revenues immediately before and after the shift in ideology. The pattern of tax revenues around ideological shifts suggests that the effects are causal.
    JEL: H20 P16
    Date: 2013–05
  6. By: Diego Focanti; Mark Hallerberg; Carlos Scartascini
    Abstract: The literature on taxes and public finance generally focuses on revenues, an easily observable and generally available variable, as the observable measure of tax policy. Still, revenues depend on many determinants other than the political will and policy objectives of the government. It is therefore important, when studying the politics of taxation, to evaluate specific changes to the tax code such as rates, bases and exemptions. With the underlying goal of exploring the political process and the determinants of tax policy, this paper compiles a novel and highly comprehensive database of tax reforms for Latin America between 1990 and 2004. The paper present a description of the database as well as the stylized facts of tax reforms in Latin America. Examples of the database’s uses are discussed, as is motivation for future research.
    JEL: D72 H2 K34
    Date: 2013–12
  7. By: Javier Alvaredo; Alejandro Bonvecchi; Ernesto Calvo; Maximiliano Castillo; Juan Carlos Gomez
    Abstract: Although recent research has shed new light on the political determinants and economic consequences of tax lawmaking, existing analyses rely on coarse data measuring political aggregates. Consequently, little is known about the political processes determining how tax legislation is written or their effect on the nature of tax reforms. This paper therefore develops a methodology to examine how Congress edits the content of tax legislation by measuring the ways Deputies, Senators, Presidents, and Ministers propose and amend such legislation. The Legislative Substance Scale proposed here measures the distance between a bill’s original position and the actual outcome of the legislative process by comparing the differences in content according to coding of the main tax policy dimensions. The scale is used to build the first systematic database of tax lawmaking in Argentina, and to describe its general patterns of authorship, approval and substantive content across presidencies in the current democratic period.
    JEL: D78 H20 H77
    Date: 2013–12
  8. By: Lucio Castro; Carlos Scartascini
    Abstract: Tax evasion is a pervasive problem in many countries. In particular, some developing countries do not collect even half of what they would if taxpayers complied with the written letter of the law. The academic literature has not been oblivious to the need to explain why people pay (or do not pay) taxes. However, the empirical literature has not yet reached consensus. This paper reports the results of a large field experiment that tried to affect compliance by influencing property tax taxpayers’ beliefs regarding the levels of enforcement, equity, and fairness of the tax system in a municipality in Argentina. Results indicate that the most effective message was one that stated the actual fines and potential legal consequences taxpayers may face in the case of noncompliance (tax compliance increased by more than 4 percentage points). No average effects are found for the treatments designed to affect beliefs about the equity and fairness of the system. However, the evidence also points out that not every taxpayer updates his or her beliefs in the same direction, as relevant heterogeneous effects are found across the population. The evidence in this paper advances the state of knowledge and may help to reconcile some of the different results in the literature.
    JEL: C93 D03 H26 H41
    Date: 2013–12

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