nep-pub New Economics Papers
on Public Finance
Issue of 2014‒11‒12
five papers chosen by

  1. The Distributional Effects of Redistributional Tax Policy By Jason DeBacker; Richard W. Evans; Evan Magnusson; Kerk L. Phillips; Shanthi P. Ramnath; Isaac Swift
  2. Fiscal targeting rules and economic stability under distortionary taxation By Claire Reicher
  3. Ranking the Stars: Network Analysis of Bilateral Tax Treaties By Maarten van 't Riet; Arjan Lejour
  4. Petroleum taxation and investment behaviour By Osmundsen, Petter; Emhjellen, Magne; Johnsen, Thore; Kemp, Alexander; Riis, Christian
  5. A Comparative Analysis of Tax Administration in Asia and the Pacific By Asian Development Bank (ADB); ; ;

  1. By: Jason DeBacker (Department of Economics, Middle Tennessee State University); Richard W. Evans (Department of Economics, Brigham Young University); Evan Magnusson (Department of Economics, Brigham Young University); Kerk L. Phillips (Department of Economics, Brigham Young University); Shanthi P. Ramnath (U.S. Department of the Treasury, Office of Tax Analysis); Isaac Swift (Department of Economics, Brigham Young University)
    Abstract: This paper constructs a large scale overlapping generations model with heterogeneity across the lifecycle and over earnings ability types. The model is calibrated to the U.S. economy and includes realistic demographics, earnings distribution, taxes, and mortality risk. We consider the effects of two policies: an increase in income tax rates and a progressive wealth tax. We find that a more progressive income tax does not change inequality in consumption, income, or wealth across the life cycle, but it does reduce inequality across ability types. In contrast, a wealth tax reduces inequality over the life cycle, but slightly increases inequality across ability types. Inequality over ability types is greater concern than changes in equality over the lifecycle.
    Keywords: inequality, Piketty, wealth tax, income tax, overlapping generations
    JEL: D51 H21 H23 H30 P16
    Date: 2014–10
  2. By: Claire Reicher
    Abstract: While European countries have engaged in a debate about fiscal policy rules, little is known about the ability of these rules to ensure stable debt and output paths when taxes are distortionary, particularly in a small open economy. In this situation, it turns out that the interaction between a fiscal rule and output may affect whether or not fiscal policy is stabilizing, or "passive", in equilibrium. For instance, under moderate debt-multiplier combinations, a debt-GDP targeting rule can result in instability, while a debt-level targeting rule, irrespective of GDP, can result in stability. A primary deficit target may result in instability for the debt but stability for output, while a total deficit target can result in stability for both debt and output. A fiscal reaction function similar to those found in the macro literature may result in stability for certain parameter values, so long as the response of fiscal policy to the past debt level is strong enough to overcome the interactions among fiscal policy, output, and interest rates. Furthermore, under certain conditions, optimal policy mimics a fiscal reaction function with a moderate degree of business cycle stabilization policy
    Keywords: fiscal rule, fiscal reaction function, deficits, stability, instability
    JEL: E62 E63 H60
    Date: 2014–10
  3. By: Maarten van 't Riet; Arjan Lejour
    Abstract: With a novel approach this paper sheds light on the international tax planning possibilities of multinationals. The international corporate tax system is considered a network, just like for transportation, and ‘shortest’ paths are computed, minimizing tax payments for the multinationals when repatriating profits. Read the accompanying press release and� background document . The network consists of 108 jurisdictions, and the ‘shortest’ paths are constructed from the rates of corporate income taxes, withholding taxes on dividends and the double taxation relief methods. Double taxation treaties typically lower bilateral withholding taxes. The possibility to funnel investments through a third country to take advantage of treaty provisions, treaty shopping, is found to lead to an average potential reduction of the combined effective tax rate of more than 6 percent. On average, multinationals need only pay taxes of 6 percent, after the corporate income tax in the host country. Moreover, the network approach identifies the countries which are most likely to perform the role of conduits. The United Kingdom heads the rankings of three out of four network centrality measures. The tax revenues on dividends for the conduit countries are less than a half percent of the worldwide flows. Finally, a crackdown on tax havens is simulated. The impact is found to be modest, both on the tax reduction and on network centrality. The result illustrates the strong dampening effect treaty shopping has on the remaining double tax rates.
    JEL: F23 H25 H26 H87
    Date: 2014–10
  4. By: Osmundsen, Petter (UiS); Emhjellen, Magne (Petoro); Johnsen, Thore (NHH); Kemp, Alexander (University of Aberdeen); Riis, Christian (BI)
    Abstract: Petroleum administration can be regarded as a principal-agent problem. The government allocates exploration and production rights to petroleum companies on behalf of the population. The government is the principal and the companies are agents. With the aim of capturing revenue for the state, the government devises a petroleum tax system which takes account of the investment decisions made by the companies, while acknowledging for the fact that the companies may report strategically to the government. An important issue is how tax deductions are to be treated in investment analysis. A discrepancy arises here between assumptions made in some areas of tax theory and the actual investment analyses conducted by the companies. Tax theory has given rise to discussion and controversial tax proposals for the petroleum sector in Norway, Denmark and Australia. It led, for example, to reductions in tax-related depreciation for the Norwegian petroleum industry in May 2013. The article reviews this tax debate and analyses the implications of basing tax design on counter-factual investment behaviour.
    Keywords: petroleum taxation; tax design; valuation; corporate behaviour
    JEL: F21 G02 H21 H25 H32 L71 M21
    Date: 2014–10–09
  5. By: Asian Development Bank (ADB); (Regional and Sustainable Development Department, ADB); ;
    Abstract: A robust and sustainable tax system requires good tax administration. This report compares the administrative frameworks, functions, and performances of tax administration bodies in 22 jurisdictions in Asia and the Pacific. The descriptive analysis is based on surveys of tax administration conducted in 2012 and 2013. The surveys attempt to provide internationally comparable data on aspects of the sample jurisdictions’ tax systems and their administration. Tentative conclusions emerge from the descriptive and comparative analysis.
    Keywords: tax system, tax administration, tax revenue, tax collection, nontax function, taxpayer, tax administration expenditure, tax expenditure, Electronic Tax Filing Systems, Electronic Tax Payment, Tax Debt Management, Administrative Review System, Gross Domestic Product, Internal Revenue Commission, taxation, fiscal resources, revenue bodies
    Date: 2014–04

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