nep-pub New Economics Papers
on Public Finance
Issue of 2016‒06‒04
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Taxation, Marriage, Home Production, and Family Labor Supply By Gayle, George-Levi; Shephard, Andrew
  2. The optimal differentiated income taxation for groups categorized based on benefits from public goods By OBARA, Takuya
  3. State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data By Xavier Giroud; Joshua D. Rauh
  4. Pollution Taxation in China: The Impact of Inspections By Liguo Lin
  5. The effects on consumer welfare of a corporate tax cut By Chris Murphy

  1. By: Gayle, George-Levi (Federal Reserve Bank of St. Louis); Shephard, Andrew (University of Pennsylvania)
    Abstract: This paper develops an empirical approach to optimal income taxation design within an equilibrium collective marriage market model with imperfectly transferable utility. Taxes distort labour supply and time allocation decisions, as well as marriage market outcomes, and the within household decision process. Using data from the American Community Survey and American Time Use Survey we structurally estimate our model and explore empirical design problems. We consider the optimal design problem when the planner is able to condition taxes on marital status, as in the U.S. tax code, but for married couples we allow for an arbitrary form of tax jointness. Our results suggest that the optimal tax system for married couples is characterized by negative jointness, although the welfare gains from this jointness are shown to be quite modest.
    JEL: C14 C71 D13 H21 J12 J22
    Date: 2016–05–23
  2. By: OBARA, Takuya
    Abstract: This paper examines optimal nonlinear income taxes under the provision of a public good when individuals differ in public goods preferences and earning abilities. We suppose two groups whose benefits from public goods are different, and we consider that the government implement the group-specific income tax schedules. Our main argument is that the government redistributive tastes and the correlation of public goods preferences and earning abilities are especially crucial in differentiating marginal income tax rates. In numerical simulations, we present how these factors affect the shape of the optimal differentiated marginal income tax rates in terms of some social welfare functions.
    Keywords: Extensive margin, Optimal nonlinear income taxation, Public goods, Tagging
    JEL: H20 H41
    Date: 2016–05–17
  3. By: Xavier Giroud; Joshua D. Rauh
    Abstract: Using Census microdata on multi-state firms, we estimate the impact of state taxes on business activity. For C corporations, employment and the number of establishments have corporate tax elasticities of .0.4, and do not vary with changes in personal tax rates. Pass-through entity activities show tax elasticities of -0.2 to -0.3 with respect to personal tax rates, and are invariant with respect to corporate tax rates. Reallocation of productive resources to other states drives around half the effect. Capital shows similar patterns but is 36% less elastic than labor. The responses are strongest for firms in tradable and footloose industries.
    Date: 2016–02
  4. By: Liguo Lin (School of Economics, Shanghai University of Finance and Economics, Shanghai)
    Keywords: taxation, China, pollution
    Date: 2016–04
  5. By: Chris Murphy
    Abstract: This paper analyses in two ways the effects of an Australian Government proposal to reduce the corporate tax rate from 30 to 25 per cent. Murphy (2016a) modelled the proposal for the Australian Treasury using CGETAX (Murphy, 2016b), a large-scale, long-run CGE model designed for tax policy analysis. The gain in the real wage is estimated at 1.0 per cent. Depending on how the company tax cut is funded, the net gain in annual consumer welfare is between $4.1 billion and $5.2 billion in 2015/16 terms and the associated gain in real GDP is from 0.7 to 0.9 per cent. This paper also uses a highly stylised version of CGETAX to provide a theoretical analysis of the proposed tax cut, applicable to advanced, open economies in general. Echoing CGETAX including by allowing for imperfect competition, the Stylised model shows an increase in the capital-labour ratio from the reduction in the cost of capital, an increase in the labour supply induced by a higher real wage when the tax cut is passed on from internationally mobile capital to labour, and a reduction in the incentive to shift profits to lower-taxed jurisdictions (de Mooij and Devereux (2009)). This paper also discusses the likely timing on the introduction of the tax cut and the economic responses to it.
    Keywords: computable general equilibrium models, oligopoly, corporate tax, Australia
    JEL: C68 D43 H25
    Date: 2016

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