nep-pub New Economics Papers
on Public Finance
Issue of 2016‒06‒09
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Tax burden optimization on economic agents by modeling interaction in the taxation system By Sokolovskyi, Dmytro; Sokolovska, Olena
  2. Do tax incentives for research increase firm innovation? An RD design for R&D By Antoine Dechezlepretre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
  3. Analysis of tax effects on consolidated household/government debts of a nation in a monetary union under classical dichotomy By Kim, Minseong
  4. Private Provision of Social Insurance: Drug-specific Price Elasticities and Cost Sharing in Medicare Part D By Liran Einav; Amy Finkelstein; Maria Polyakova
  5. Wealth inequality in Sweden: What can we learn from capitalized income tax data? By Lundberg, Jacob; Waldenström, Daniel
  6. An Analysis of the President’s 2017 Budget By Congressional Budget Office
  7. Social Security Policy Options, 2015 By Congressional Budget Office

  1. By: Sokolovskyi, Dmytro; Sokolovska, Olena
    Abstract: This paper aims to propose the approach to classify the industries in terms of easiness of tax evasion. Basing on assumptions of taxpayer’s behavior, our results allow defining the type of dependence of real tax rates on their nominal ones. We find that the graph, describing the taxpayer’s behavior, has two key points: maximum – the optimal tax rate (if this rate increase, the real tax revenues fall), and also the point of simple reproduction (after achieving this level, firms stop to pay taxes at all with appropriate shifting into informal sector or closing down). I.e. two key levels of tax burden: «optimal» and «zero» can be defined. The values of those parameters for taxpayers operating in different groups of industries were calculated.
    Keywords: tax burden, economic behavior, tax evasion, game theory
    JEL: C72 G38 H26
    Date: 2016–05–05
  2. By: Antoine Dechezlepretre; Elias Einiö; Ralf Martin; Kieu-Trang Nguyen; John Van Reenen
    Abstract: We present the first evidence showing causal impact of research and development (R&D) tax incentives on innovation outcomes. We exploit a change in the asset-based size thresholds for eligibility for R&D tax subsidies and implement a Regression Discontinuity Design using administrative tax data on the population of UK firms. There are statistically and economically significant effects of the tax change on both R&D and patenting, with no evidence of a decline in the quality of innovation. R&D tax price elasticities are large at about 2.6, probably because the treated group is from a sub-population subject to financial constraints. There does not appear to be pre-policy manipulation of assets around the thresholds that could undermine our design, but firms do adjust assets to take advantage of the subsidy post-policy. We estimate that over 2006-11 business R&D would be around 10% lower in the absence of the tax relief scheme.
    Keywords: R&D; patents; tax; innovation; Regression Discontinuity design
    JEL: J24 M0
    Date: 2016–03
  3. By: Kim, Minseong
    Abstract: Unlike many analysis of tax effects on consolidated household/government debts in a monetary union, this paper builds up analysis from a consolidated budget constraint, instead of starting from a model. By a monetary union, it is assumed that all nations in the union share same currency. Also, if taxes are assumed to be in real values, or if one assumes that government targets real value of taxes $T/P$, then it is also possible to produce the size of fiscal multiplier on real value of consolidated debts, if relaxed version of classical dichotomy - that agents' decisions are only affected by real variables - is assumed. This paper argues that size is $db/dt_r = -1$ where $t_r$ is real value of taxes or ``real taxes'' and $b = B/(PR)$ where $B = -D$ with $D$ nominal debt, $P$ price and $R-1$ nominal interest rate , or in terms of real debts, $dd/dt_r = 1$.
    Keywords: fiscal multiplier; tax multiplier; debt analysis; monetary union; household debts; international macroeconomics
    JEL: E13 E62 F19 F41 F45 H30 H60
    Date: 2016–04–28
  4. By: Liran Einav; Amy Finkelstein; Maria Polyakova
    Abstract: Standard theory suggests that optimal consumer cost-sharing in health insurance increases with the price elasticity of demand, yet publicly-provided drug coverage typically involves uniform cost-sharing across drugs. We investigate how private drug plans set cost-sharing in the context of Medicare Part D. We document substantial heterogeneity in the price elasticities of demand across more than 150 drugs and across more than 100 therapeutic classes, as well as substantial heterogeneity in the cost-sharing for different drugs within privately-provided plans. We find that private plans set higher consumer cost-sharing for drugs or classes with more elastic demand. Our findings suggest that benefit design may be more efficient in privately rather than publicly provided insurance.
    JEL: D12 G22 H51 I13
    Date: 2016–05
  5. By: Lundberg, Jacob; Waldenström, Daniel
    Abstract: This paper presents new estimates of wealth inequality in Sweden during 2000-2012, linking wealth register data up to 2007 and individually capitalized wealth based on income and property tax registers for the period thereafter when a repeal of the wealth tax stopped the collection of individual wealth statistics. We find that wealth inequality increased after 2007 and that more unequal bank holdings and apartment ownership appear to be important drivers. We also evaluate the performance of the capitalization method by contrasting its estimates and their dispersion with observed stocks in register data up to 2007. The goodness-of-fit varies tremendously across assets and we conclude that although capitalized wealth estimates may well approximate overall inequality levels and trends, they are highly sensitive to assumptions and the quality of the underlying data sources.
    Keywords: Capitalization method; Gini coefficient; great recession; Investment income method; Top wealth shares; wealth distribution
    JEL: D31 H2 N32
    Date: 2016–04
  6. By: Congressional Budget Office
    Abstract: CBO and the staff of the Joint Committee on Taxation (JCT) estimate that under the President’s proposals, the federal budget deficit would decline in 2017 and 2018. After that, however, outlays would rise more quickly than revenues, so deficits would grow. CBO and JCT project that, between 2017 and 2026, the President’s budget would result in deficits averaging about 3 percent of GDP and totaling $6.9 trillion, $2.4 trillion less than the deficits in CBO’s current-law baseline.
    JEL: H20 H30 H50 H51 H55 H60 H61 H62 H63 H68
    Date: 2016–03–29
  7. By: Congressional Budget Office
    Abstract: CBO analyzes 36 policy options commonly proposed by policymakers and analysts. Most of them would improve Social Security’s long-term finances, but only a few would significantly postpone the combined trust funds’ exhaustion date.
    JEL: H55 H60 H68 J26
    Date: 2015–12–15

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