nep-pub New Economics Papers
on Public Finance
Issue of 2015‒06‒05
nine papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Laffer Curves and Public Goods By John Hartwick
  2. The Earned Income Tax Credit (EITC) By Austin Nichols; Jesse Rothstein
  3. Improving the System of Tax Revenues Forecast By Sentyureva, N; Yagîvkinà, Vità; Kolomak, Evgeniya; Uskov, D
  4. Structural Alternatives to the Tax Administration By Belev, Sergei; Zolotareva, Anna; Malayrev, Aleksandr; Sokolov, Ilya
  5. Free Movement of Persons: The Mirage of Social Security Schemes By Roxana Sandu
  6. When Trade Leads to Inefficient Public Good Provision: a Tax competition model By Emmanuelle Taugourdeau; Abderrahmane Ziad
  7. Corporate Tax and Location Choice for Multinational Firms By Lawless, Martina; McCoy, Daire; Morgenroth, Edgar; O'Toole, Conor
  8. The Calculation of Weighted Price Elasticity of Tax: Turkey (1998-2013) By Yılmaz, Engin; Süslü, Bora
  9. Tax Competition between Countries and Associations of Countries in the Former Soviet Union By Kornienko, Natalia; Postnikova, N; Velikova, Elisa; Gulyaeva, S

  1. By: John Hartwick (Queen's University)
    Abstract: We set out and solve a static neoclassical model with a labor/leisure choice for agents and a government sector producing a Samuelsonian public good. Numerical solutions vary considerably with the elasticity of substitution for commodities in an agent's utility function. We focus on solutions with an income tax rate set by the government (second best solutions). Government revenue varies with the rate of income tax (expressed in a Laffer Curve) and we observe that such curves generally peak "internally" only for case of "high" elasticity values in the utility function of a representative agent. Inelastic substitution possibilities involve the peaking of the Laffer Curve at a corner with the rate of income tax tending to unity. We report on welfare analysis for small changes in the rate of income tax and on first best outcomes (agents charged Samuelson "prices" for the public good).
    Keywords: Laffer curves, public goods, income tax incidence
    JEL: H22 H24 H41
    Date: 2015–05
  2. By: Austin Nichols; Jesse Rothstein
    Abstract: We review research on the Earned Income Tax Credit (EITC), focusing on work appearing since the Hotz and Scholz (2003) review. Recent work has confirmed earlier findings that labor supply effects are positive for single mothers, smaller and negative for married mothers, and essentially nonexistent for men. Where earlier estimates indicated that all responses were on the extensive margin, some recent studies find evidence of non-zero, but small, intensive margin effects. We also review research on the incidence of the credit, suggesting that employers capture some of the program benefits through lower wages; on the large impact of the program on poverty rates and on children’s outcomes; and on families’ apparent preferences for lump-sum refunds over smaller payments distributed throughout the year. We present new evidence regarding the accuracy of EITC imputations in the Current Population Survey. We discuss proposals for reform, including a more generous childless credit, and argue that the EITC may be complementary to the minimum wage, rather than an alternative.
    JEL: D31 H2 H22 J2
    Date: 2015–05
  3. By: Sentyureva, N (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Yagîvkinà, Vità (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Kolomak, Evgeniya (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Uskov, D (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: Forecasting of tax revenues is an integral part of the budget process, the implementation of which is taking the necessary political, financial and socio-economic solutions. Under the conditions of existence of financial instability in the economy, improved forecasting tool designed to solve the problems of prediction and prevention of the negative effects of economic shocks, ensure the financial sustainability of the budget system of the Russian Federation.
    Keywords: tax revenues, forecasting, budget, financial sustainability
    Date: 2015–05
  4. By: Belev, Sergei (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Zolotareva, Anna (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Malayrev, Aleksandr (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Sokolov, Ilya (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: This study analyzes several structural alternatives of tax administration in terms of contracts design for tax officers. Particularly, it considers pros and cons of using different efficiency indicators within an efficient contract framework. To understand, which indicators can be used in practice, there has been conducted an analysis of official documents. Since it is not explicitly stated in official data which indicators are used, econometric methods can be viewed as an alternative approach to figure out the presence of relationship between the wage fund and its possible determinants. Overall, the results indicate that the salaries level depends on revenues from taxes and fines, as well as additional revenues from field checks along with expenditures from tax proceeding revisions by courts, ceteris paribus. The estimated effects of these variables constitute only minor fraction of wage payments.
    Date: 2015–04
  5. By: Roxana Sandu (European Economic Studies Department, College of Europe)
    Abstract: The purpose of this paper is to address the issue of social security benefits that jobseekers, nationals of other Member State, residing in another Member States are in title to, as well as the economic implications of free movement of persons and labour market access. Consequently, it aims to disentangle between labour mobility welfare effects and “benefit tourism” looking in particular at the United Kingdom social security system and analysing the policy framework currently in place that governs the free movement of people across the European Union Member States.
    Keywords: Free Movement of Persons, Labour Mobility Welfare Effects, Social Security, Benefit Tourism
    JEL: H31 H55 H77 I31 J01 J15 J78
    Date: 2015–05
  6. By: Emmanuelle Taugourdeau (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Abderrahmane Ziad (CREM - Centre de Recherche en Economie et Management - CNRS - Université de Caen Basse-Normandie - UR1 - Université de Rennes 1)
    Abstract: This paper analyses the tax competition mechanisms in a context of commodity trade. We show that the trade market equilibrium may restore the efficiency of the public good provision when agents from different countries have symmetric preferences. Asymmetry in preferences implies over or underprovision in public goods depending on the degree of asymmetry between countries. In both cases, the price adjustment leaves the capital stock unchanged so that the stock of capital is not affected by the taxes. Finally, we show that the centralized choice does not systematically restore the efficiency of the public good provision.
    Abstract: Cet article analyse les mécanismes de concurrence fiscale dans un contexte d'échanges de biens entre deux pays. Nous montrons que l'équilibre de la balance commerciale peut restaurer l'efficacité de la fourniture de biens publics lorsque les agents des différents pays ont des préférences symétriques. Une asymétrie dans les préférences des agents entraine une sous-provision ou une sur-provision des biens publics selon le degré d'asymétrie. Dans les deux cas, l'ajustement des prix égalise les rendements du capital de sorte que le stock de capital reste inchangé suite à une modification des taxes. Enfin, nous montrons que l'équilibre centralisé ne restaure pas systématiquement l'efficacité de la fourniture de biens publics.
    Date: 2015–02
  7. By: Lawless, Martina; McCoy, Daire; Morgenroth, Edgar; O'Toole, Conor
    Abstract: The corporate tax rate and regime are policy instruments that are the subject of considerable attention for the role they play in attracting foreign multinationals making location decisions across countries. This paper examines the effects of corporate tax on these location decisions of newly established multinational subsidiaries across 26 European countries over an eight year period. We contribute to the existing literature by examining the effects of a non-linear response of firm location decisions to changes in the tax rate. We find that accounting for this non-linearity improves the performance of the model for all of the alternative measures of the tax rate. We also show that there are large variations in the sensitivity to tax rates across sectors and firm size groups. In particular, financial sector firms are more than twice as sensitive to changes in corporation tax rates relative to other sectors.
    Keywords: Corporation Tax, Location Choice, Multinational firms, FDI
    JEL: C25 F23 H25
    Date: 2015–06–03
  8. By: Yılmaz, Engin; Süslü, Bora
    Abstract: In this study, the assumption of “the weighted price elasticity of tax is a unit in the developing countries” suggested in the first studies which examine the impacts of the inflation on tax revenues, will be reevaluated for Turkey in the period of 1998-2013. We use Turkish tax and price index data for calculating the weighted price elasticity of tax. Via the method of dynamic ordinary least squares (DOLS), the long run weighted price elasticity of tax system is guessed. The importance of this study is the fact that this is first study intended to the calculation of the weighted price elasticity of tax for Turkey. In this sense, it will be instructive study for the reconsideration of the assumption of “the weighted price elasticity of tax is a unit in the developing countries”.
    Keywords: Tanzi Effect, Weighted Price Elasticity of Tax, Taxation
    JEL: H20 H24 H30
    Date: 2015–02–19
  9. By: Kornienko, Natalia (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Postnikova, N (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Velikova, Elisa (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Gulyaeva, S (Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: Today, with the rising mobility of capital and labor between the two countries is growing competition for their involvement. In order to create competitive advantages State use, including tax instruments. In this study, an analysis of tax competition between countries and associations of countries in the former Soviet Union, taking into account the fact that within the framework of integration associations tax competition may appear significantly brighter due to the removal (reduction) barriers to the movement of factors of production. Research operates with data of the laws of the post-Soviet space on 01.07.2014. The study analyzed current issues of unfair (harmful) tax competition and the former Soviet Union, prepared proposals for the protection of tax interests of Russia as a result of tax competition with neighboring states, and present a proposal, taking into account the interests of the EAEC integration association in the former Soviet Union, of which Russia is a part of.
    Keywords: tax competition, tax interests, former Soviet Union
    Date: 2015–04

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