nep-pub New Economics Papers
on Public Finance
Issue of 2016‒02‒04
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. The consequences of the value-added tax on inequality By Kaisa Alavuotunki,; Jukka Pirttilä2
  2. 401(k) Tax Policy Creates Inequality By Teresa Ghilarducci; Adam Hayes
  3. The Suitability of Tax Data to Study Trends in Inequality. A Theoretical and Empirical Review with Tax Data from Switzerland By Oliver Hümbelin; Rudolf Farys
  4. Tax-benefit microsimulation in Ecuador: A feasibility study By H. Xavier Jara
  5. Tax.benefit microsimulation: Feasibility study in Ethiopia By Andualem T. Mengistu; Kiflu G. Molla; Firew B.Woldeyes
  6. Tax-benefit microsimulation modelling in Tanzania By Vincent Leyaro; Elineema Kisanga; Gemma Wright; Helen Barnes; Michell Mpike

  1. By: Kaisa Alavuotunki,; Jukka Pirttilä2
    Abstract: : The adoption of the value-added tax has arguably been one of the most important tax policy measures worldwide, but is also one of the most heatedly debated. While some argue that the VAT has served as a useful tool to boost government revenue, others claim that it is also a regressive tax, contributing to increased inequality within the developing world. Using newly released high-quality macro data, this paper offers updated estimates of the revenue impacts of the VAT and the first estimates on its consequences on inequality at the macro level. The results from instrumental variable estimations reveal that the revenue consequences of the VAT have not been positive, contrasting results from earlier work. VAT adoption has not led to increased inequality, suggesting that the move to the VAT has not undermined equitable development.
    Keywords: tax policy, value-added tax, inequality, developing countries
    Date: 2015
  2. By: Teresa Ghilarducci; Adam Hayes (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: Though well-intentioned, the current system of tax deferral for retirement contributions undermines public policy aimed at strengthening retirement security for all Americans. In fact, it has become a regressive policy that contributes to wealth inequality. This policy note illustrates how two employees who are identical savers and investors in every way except for income receive different rates of return due only to the effects of the tax code. Converting the current system of tax deductions for defined contribution retirement plans to a refundable tax credit would solve this problem and treat all retirement savers the same.
    Keywords: Retirement, 401(k), Tax, Inequality
    JEL: J26 H2 D63
    Date: 2015–02
  3. By: Oliver Hümbelin; Rudolf Farys
    Abstract: In many countries results of inequality trends are ambiguous, because different methodological approaches blur the picture or because reliable data are not available. In this paper we assess whether tax data are suitable for inequality trend analysis. We do this by comparing tax data measurement concepts concerning income definition, statistical units and population coverage to theoretical ideal concepts. To get a sense of direction and magnitude of potential biases, we estimate the impact of tax data-related methodological options for inequality measures with Swiss tax data. Where possible and meaningful, we compare tax data results to corresponding results from surveys. While there are clear advantages of tax data like long-term availability and reliable population coverage in more recent years, there are also drawbacks that lead to an overestimation of inequality and hinder comparability over time. In sum, tax data are a source that should be used with care, but nonetheless seem to be indispensable for inequality analysis. As a substantive result for Switzerland, our tax data analysis raises doubts about the declining inequality trend reported by survey data for the last decades.
    Keywords: Tax Data, Inequality Trend, Income Distribution, Switzerland
    JEL: D31 H24
    Date: 2015–11–30
  4. By: H. Xavier Jara
    Abstract: The aim of this study is to evaluate the feasibility to implement a tax and benefit microsimulation model for Ecuador using EUROMOD as an interface. We first present a detailed description of the main components of the tax and benefit system in Ecuador for year 2014. We then describe available micro datasets, which could be potentially used as input data for the microsimulation model. Finally, we provide an assessment and recommendations concerning the possibilities for simulating particular instruments of the tax-benefit system with the data available in the country.
    Keywords: taxes, benefits, microsimulation, income
    Date: 2015
  5. By: Andualem T. Mengistu; Kiflu G. Molla; Firew B.Woldeyes
    Abstract: The purpose of this study is to assess the feasibility of building a microsimulation model of the Ethiopian tax and benefits system. We first provide a detailed description of the tax and benefits system of the country. This includes qualifying criteria, tax brackets, and exemptions. We then describe household survey datasets available in the country and examine the nature of these datasets in terms of representativeness, completeness, and panel data structure. Finally, we provide assessments for whether each tax and benefits system can be microsimulated given the rules and the nature of the data available.
    Keywords: tax, benefits, microsimulations, revenue, Ethiopia
    Date: 2015
  6. By: Vincent Leyaro; Elineema Kisanga; Gemma Wright; Helen Barnes; Michell Mpike
    Abstract: This paper presents the findings from a feasibility study on the potential for developing a static tax-benefit microsimulation model for Tanzania. The paper provides an account of the current tax-benefit system in Tanzania and introduces the survey dataset which could function as the underpinning data for the model. The paper concludes with an assessment of the feasibility of producing such a model for Tanzania with reference to personal income tax, indirect taxes, and contributory and non-contributory benefits. Keywords: tax, benefits, microsimulation, Tanzania
    Keywords: tax, benefits, microsimulation, Tanzania
    Date: 2015

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