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on Public Finance |
| By: | Costa, Carlos da; Maestri, Lucas |
| Abstract: | We study optimal labor income taxation in non-competitive labor markets. Firms offer screening contracts to workers who have private information about their productivity. A planner endowed with a Paretian social welfare function tries to induce allocations that maximize its objective. We provide necessary and sufficient conditions for implementation of constrained efficient allocations using tax schedules. All allocations that are implementable by a tax schedule display negative marginal tax rates for almost all workers. Not all allocations that are implementable in a competitive setting are implementable in this noncompetitive environment. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:775&r=pub |
| By: | Stéphane Gauthier (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Fanny Henriet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics) |
| Abstract: | We study optimal commodity taxes in the presence of non-linear income taxes when agents differ in skills and tastes for consumption. We show that commodity taxes are partly determined by a many-person Ramsey rule when there is taste heterogeneity within income classes. The usual role of consumption taxes in relaxing incentive constraints explains the remaining part of these taxes when there is taste heterogeneity between income classes. We quantify the importance of these two components on Canadian microdata using a new method to identify empirically the binding incentive constraints. Incentives matter but tax exemptions are mostly justified by Ramsey considerations. |
| Keywords: | taste heterogeneity, commodity taxes, income taxation, empirical tests for asymmetric information, social weights |
| Date: | 2016–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-01252563&r=pub |
| By: | Aronsson, Thomas (Department of Economics, Umeå University); Johansson-Stenman, Olof (Department of Economics, School of Business, Economics and Law, University of Gothenburg, Sweden); Wendner, Ronald (Department of Economics, University of Graz, Austria) |
| Abstract: | This paper deals with tax policy responses to charitable giving based on a model of optimal redistributive income taxation. The major contribution is the simultaneous treatment of (i) warm-glow and stigma effects of charitable donations; (ii) that the warm glow of giving and stigma of receiving charity may to some extent depend on relative comparisons; and (iii) that people are also concerned with their relative consumption more generally. Whether charity should be taxed or supported turns out to largely depend on the relative strengths of the warm glow of giving and the stigma of receiving charity, respectively, and on the positional externalities caused by charitable donations. In addition, imposing stigma on the mimicker (via a relaxation of the self-selection constraint) strengthens the case for subsidizing charity. We also consider a case where the government is unable to target the charitable giving through a direct tax instrument, and examine how the optimal marginal income tax structure is adjusted in response to charitable giving. |
| Keywords: | Conspicuous consumption; conspicuous charitable giving; optimal income taxation; warm glow; stigma |
| JEL: | D03 D62 H21 H23 |
| Date: | 2016–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:umnees:0919&r=pub |
| By: | Hoseini, Mohammad (Tilburg University, Center For Economic Research) |
| Abstract: | Under the VAT, formal traders report their purchases to the administration for a<br/>deduction in their VAT bill. This paper models this third-party reporting feature of the VAT in an input-output economy and quantifies it among different activities using a forward linkages index. The administration can reduce the size of shadow economy by reallocating visiting audits to backwardly linked activities and cross-checking VAT payments with input credit claims in forwardly linked activities. Empirical evidence from Indian service sector justifies the assumptions and suggests a significant increase in the tax compliance of forwardly linked activities following VAT adoption in 2003. |
| Keywords: | Value-added tax; Informality; Tax enforcement; Linkage analysis |
| JEL: | H26 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:56358907-5e47-49f6-9a74-f59c0b69c49b&r=pub |
| By: | Hisahiro Naito |
| Abstract: | Several theoretical models have been proposed to explain household behavior, such as the unitary model, non-cooperative model, and cooperative model. These three models make different predictions about the provision of household public goods. By using both the Japanese tax reforms conducted in the 1990s as a quasi-natural experiment and Japanese panel data on household expenditure, I study how the within-household income distribution affects household public goods and discuss which model is most relevant. I find that the neutrality of the effect of the income distribution on household public goods does not hold, which shows the failure of the unitary model. I also find evidence that the non-cooperative model does not hold either. Finally, I argue that the observed data are consistent with the cooperative bargaining model. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:tsu:tewpjp:2015-004&r=pub |