nep-pub New Economics Papers
on Public Finance
Issue of 2016‒05‒21
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Corporate tax avoidance — the range of the problem and its effects on economy By Agata Iwasiuk
  2. The Impact of Taxes and Wasteful Government Spending on Giving By Sheremeta, Roman; Uler, Neslihan
  3. A new measure to quantify the effects of U.S. tax policy news By J. Nikolaj Dybowski; T. Philipp Dybowski
  4. Effective Marginal Tax Rates for Low- and Moderate-Income Workers in 2016 By Congressional Budget Office
  5. Does Endogenous Timing Matter in Implementing Partial Tax Harmonization? By Itaya, Jun-ichi; Yamaguchi, Chikara
  6. Current Status of the Local Income Tax in New York City By Tatsuhiko Tani
  7. Extrinsic and intrinsic motivations for tax compliance: evidence from a field experiment in Germany By Nadja Dwenger; Henrik Kleven; Imran Rasul; Johannes Rincke
  8. Taxes Rates, Economic Crisis and Tax Evasion: Evidence using Zimbabwe and South Africa Bilateral Trade Flows By Marko Kwaramba and Calvin Mudzingiri

  1. By: Agata Iwasiuk (Jagiellonian University)
    Abstract: The main aim of this study is to draw attention to the significant problem of tax avoidance by multinational corporations. In the times of globalization, tax competition among countries and development of modern technology transnational corporations can operate with complex financial transactions to reduce to the minimum the amount of tax or completely avoid taxation. Governments in many countries due to the dreinage of public finances are forced to take measures that will minimize the range of the problem. Losses are counted in billons and there's a growing tendency. Without taxes, which are the basis for state's budget and finance all public good and services, further development of country is impossible. It is necessary for all countries to cooperate in order to counteract tax avoidance and develope new systems of taxation of multinational corporations.
    Keywords: corporate tax avoidance; taxation; multinational corporations; globalization; tax havens; fiscal drainage
    JEL: F5 F6 G3 H2 H3
    Date: 2016–05
  2. By: Sheremeta, Roman; Uler, Neslihan
    Abstract: We examine the impact of taxes and wasteful government spending on charitable giving. In our model, the government collects a flat-rate tax on income net of donations and wastes part of the tax revenue before redistribution. The model provides theoretical predictions which we test in a framed field experiment. The results of the experiment show that the tax rate has a weak and insignificant effect on giving. The degree of waste, however, has a large, negative and significant effect on giving, with the relationship moderated by the curvature in the utility function.
    Keywords: giving, charity donations, tax, waste, redistribution, experiments
    JEL: C90 D64 H41
    Date: 2016–04–27
  3. By: J. Nikolaj Dybowski; T. Philipp Dybowski
    Abstract: Recent empirical research on tax policy stresses the importance of tax news measures to gauge anticipation or sentiment effects. Yet, variables with adequate informational content on tax policies are scarce and only exist for the United States. By using a probabilistic topic model, known as LDA (Latent Dirichlet Allocation), we investigate the tax policy content of over 97,000 presidential documents from 1945 to 2015. This allows us to obtain a probability for each document to cover tax policy issues and to construct a continuous time series for presidential tax news. The dynamics of this variable show high consistency with documented U.S. tax reforms. We use this measure to augment well-known SVAR frameworks and study the effects of tax policy news on output and its components. We find that increased tax news stimulate economic activity temporarily. The attractiveness of our tax news measure is its time-efficient and low-cost construction from narrative sources, and hence, opens up new perspectives to analyze similar effects for other countries.
    Keywords: topic model, tax policy, news, SVAR
    JEL: C32 C82 D72 D83 E62
    Date: 2016–05
  4. By: Congressional Budget Office
    Abstract: In 2016, low- and moderate-income workers will face an effective marginal tax rate of 31 percent, on average. Federal individual income and payroll taxes will be the main contributors.
    JEL: H20 H24 I38
    Date: 2015–11–19
  5. By: Itaya, Jun-ichi; Yamaguchi, Chikara
    Abstract: The endogenous timing of moves is analyzed in a repeated game setting of capital tax competition, where a subgroup of countries implementing partial tax harmonization and outside countries choose whether to set capital taxes sequentially or simultaneously. It is shown that the simultaneous-move outcome prevails in every stage game of the infinitely repeated tax-competition game as its subgame-perfect Nash equilibrium (SPNE) if a taxunion consists of similar countries, whereas both the simultaneous-move and sequentialmove (Stackelberg) outcomes can be sustained as SPNEs when a tax-union consists of dissimilar countries. This is in sharp contrast with the finding of Ogawa (2013). In his two-stage game, when asymmetric countries in terms of productivity have opposite incentives towards the terms of trade in order to manipulate the price of capital in their favor, there exists only a simultaneous-move Nash equilibrium. This difference arises from the fact that infinite repetition is able to support a wider range of behavior that is not a Nash equilibrium of the one-shot stage game of the repeated tax-competition game, such as a Stackelberg follower’s strategy.
    Keywords: Tax competition, Tax harmonization, Endogenous timing, Repeated game,
    Date: 2015–06
  6. By: Tatsuhiko Tani (Office of Research Development and Sponsored Projects, Mita Campus, Keio University)
    Abstract: The orthodox view of local taxation is that local governments should not levy a progressive local income tax. However, a progressive local income tax is a major revenue source of New York City government revenue. Furthermore, in recent years, several Democrats in New York City have raised plan to make the city's income tax more progressive. Why is it considered that a progressive local income tax is a fair tax in New York City? This paper explores the economic and political background of progressive local income taxation in New York City.
    Keywords: Local Income Taxation, Taxes in New York City, Local Income Redistribution, Income Inequality
    JEL: H71 H24
    Date: 2016–03–29
  7. By: Nadja Dwenger; Henrik Kleven; Imran Rasul; Johannes Rincke
    Abstract: We study extrinsic and intrinsic motivations for tax compliance in the context of a local church tax in Germany. This tax system has historically relied on zero deterrence so that any compliance at baseline is intrinsically motivated. Starting from this zero deterrence baseline, we implement a field experiment that incentivized compliance through deterrence or rewards. Using administrative records of taxes paid and true tax liabilities, we use these treatments to document that intrinsically motivated compliance is substantial, that a significant fraction of it may be driven by duty-to-comply preferences, and that there is no crowd-out between extrinsic and intrinsic motivations.
    Keywords: tax compliance; intrinsic motivation; extrinsic motivation; filed experiment
    JEL: C93 H26
    Date: 2016
  8. By: Marko Kwaramba and Calvin Mudzingiri
    Abstract: Prompted by the theoretical ambiguity in the relationships between tax rates and tax evasion, this study investigates the relationship between tariff (tax) rates and tax evasion using highly disaggregated trade data for Zimbabwe and South Africa. The study uses cross-sectional data analysis for three periods; pre-crisis (1980 to 1999), crisis (2000-2008) and post-crisis (2009-2014). The results show different responses of tax evasion to tariff changes in the three periods. During both the pre-crisis and post-crisis periods, a decrease in tariff rates is associated with a reduction in tax evasion, while during the crisis period, a decrease in tariff rates is associated with an increase in tax evasion. The results suggest that tariff reduction during an economic crisis is not always associated with a decrease in tax evasion. Further disaggregating products using Rauch and UNCTAD product classification show that tariff changes have a positive impact on tax evasion for consumer goods and differentiated products.
    Keywords: Economic crisis, tariff rates, tax evasion, trade flows
    JEL: F14 F18 H26
    Date: 2016

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