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on Public Finance |
| By: | Creedy, John; Gemmell, Norman |
| Abstract: | The aim of this paper is to provide an introduction to the concept of user cost and its determinants. Particular attention is given to the influence of taxation. The concept of user cost relates to the rental, the rate of return to capital, that arises in a profit maximising situation in which further investment in capital produces no additional profit. This paper sets out in some detail the range of assumptions involved in obtaining alternative expressions for the user cost. The user cost refers to a before-tax capital rental, the rate of return that ensures that the (after-tax) cost of capital is equal to the post-tax returns over its life. Hence, associated with the user cost measure is an effective marginal tax rate. This can differ substantially from the statutory marginal rate applicable to the investor. A related effective average tax rate is also defined. |
| Keywords: | Taxation, User cost, Tax rates, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwcpf:4236&r=pub |
| By: | José María Durán-Cabré (Universidad de Barcelona & IEB); Alejandro Esteller-Moré (Universidad de Barcelona & IEB); Luca Salvadori (Universidad de Barcelona & IEB, TARC) |
| Abstract: | The literature on horizontal tax interdependence pays limited attention to interactions in administrative policies, although they can play a large role in determining the amount of tax revenues collected. We investigate the incentives for sub-central tax authority cooperation in a decentralized context, with the aim of identifying the determinants of that cooperation. Our results are congruent with standard theory; in particular, the existence of reciprocity is essential for sharing tax information, but there is sluggishness in this process, which is partly the result of the short-sighted behaviour of tax authorities influenced by budget constraints. Hence, this is good news for the functioning of a decentralized tax administration, as in the medium-long run the gains to be made from sharing tax information are achieved. |
| Keywords: | Tax information sharing, reciprocity, fiscal federalism |
| JEL: | H71 H77 H83 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2015-7&r=pub |
| By: | Jon Bakija (Williams College); Ivan Badinski (The Analysis Group) |
| Abstract: | In almost all countries that operate a value-added tax (VAT), the VAT “zero-rates†exports, meaning that exporting firms can claim credit for VAT on their inputs, but pay no VAT on sales of exports. This is necessary when the goal is to make the base of the tax domestic consumption. A consequence is that firms can reduce their tax burdens by misreporting some of their sales to domestic consumers as exports. In principle, reported exports from country i to country j should match up with reported imports into country j from country i, except for measurement errors, and costs of insurance and freight that are included in import value but not export value. VAT evasion can be another source of discrepancy which would tend to cause reported exports to exceed reported imports for trade flows in the same direction. We use data on such discrepancies in trade flows between pairs of European Union member countries during 1984 through 2011 to infer whether higher VAT rates are associated with greater over-reporting of exports. A difference-in-differences identification strategy, exploiting the fact that VAT rates changed in different ways over time in different countries, suggests that each percentage point increase in the exporting country’s standard VAT rate increases the discrepancy of exports over imports by about 1.1 percent of exports. For the typical EU-15 country, this implies that at the margin, about 15 percent of the static revenue gain from a VAT rate increase would be lost due to this particular channel for VAT evasion. |
| Keywords: | value added tax, exports, evasion |
| JEL: | H2 H26 |
| Date: | 2014–11 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2014-06&r=pub |
| By: | Reischmann, Andreas |
| Abstract: | Many mechanisms have been designed to solve the free-rider problem in public good environments. The designers of those mechanisms focused on good static equilibrium properties. In this paper, I propose a new mechanism for the provision of public goods that has good dynamic properties instead. The mechanism gives all agents the possibility to condition their contribution on the total level of contribution provided by all agents. Under a reasonable variant of Better Response Dynamics all equilibrium outcomes are Pareto efficient. This makes the mechanism particularly suited for repeated public good environments. In contrast to many previously suggested mechanisms, it does further not require an institution that has the power to enforce participation and/or transfer payments. Neither does it use any knowledge of agents preferences. |
| Keywords: | Mechanism Design; Public Goods; Better Response Dynamics. |
| Date: | 2015–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:awi:wpaper:0586&r=pub |