nep-pub New Economics Papers
on Public Finance
Issue of 2016‒12‒04
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Problematic response margins in the estimation of the elasticity of taxable income By Kristoffer Berg; Thor O. Thoresen
  2. Nonpoint source pollution: An experimental investigation of the Average Pigouvian Tax By Hamet Sarr; Mohamed Bchir; Francois Cochard; Anne Rozan
  3. The Flypaper Effect in Germany: An East-West Comparison By Korzhenevych, Artem; Langer, Sebastian
  4. Financing elderly care in Italy and Europe. Is there a common vision? By Elenka Brenna; Lara Gitto

  1. By: Kristoffer Berg; Thor O. Thoresen (Statistics Norway)
    Abstract: The elasticity of taxable income (ETI) is known to represent a summary measure of tax efficiency costs, which means that further information about the behavioral components of the ETI is not required for its use in tax policy design. However, as there are response margins that may cause biases in the estimation of the elasticity, we advise against neglecting information about the composition of the behavior seized by the ETI. When using responses of the Norwegian self-employed to the tax reform of 2006 for illustration, we discuss how four different responses relate to the overall ETI, given characteristics of the reform. Effects on working hours, on tax evasion, and from shifts in organizational form and across tax bases are discussed in terms of to what extent they represent sources to estimation bias, or enter into the ETI in a decompositional way. We provide empirical illustrations of the effects of each of these margins, and we show that the estimated ETI is biased downward because of organizational shifts.
    Keywords: elasticity of taxable income; self-employed; tax evasion; organizational shift
    JEL: H24 H26 H31 J2
    Date: 2016–11
  2. By: Hamet Sarr (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - Irstea - ENGEES, Université de Strasbourg); Mohamed Bchir (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - Irstea - ENGEES, Université de Strasbourg); Francois Cochard (CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté, UBFC - Université Bourgogne Franche-Comté); Anne Rozan (UMR GESTE - Gestion Territoriale de l'Eau et de l'environnement - Irstea - ENGEES, Université de Strasbourg)
    Abstract: The “Average Pigouvian Tax” (APT) was proposed by Suter et al. (2008) to reduce the financial burden of the standard ambient tax. This instrument consists in a standard ambient tax divided by the number of firms, which requires polluters to cooperate in order to achieve the social optimum. To enable polluters to cooperate, communication is allowed. We introduce different types of communication: cheap talk, exogenous costly communication (communication is imposed), and endogenous costly communication (conducted on a voluntary basis after a vote). Our experiment confirms that the instrument induces polluters to reduce their emissions under cheap talk. However, we find that group emissions are less reduced when communication is costly. This result still holds even when we endogenize communication by introducing a voting phase.
    Keywords: nonpoint source pollution, ambient tax, social dilemma, cooperation, cheap talk, costly communication, vote
    Date: 2016–05–01
  3. By: Korzhenevych, Artem; Langer, Sebastian
    Abstract: We investigate the effect of general-purpose transfers on different expenditure categories and tax rates in the municipalities of Saxony (eastern Germany) and North Rhine-Westphalia (western Germany). Findings from the panel data analysis suggest the existence of the "flypaper effect" - municipalities use transfers to increase expenditures but do not reduce taxes. For most expenditure subcategories the estimated coefficients are alike, suggesting similarity of spending priorities in the two federal states despite the differences in the transfer dependency. Targeted support of eastern municipalities could potentially explain few identified differences in the spending behavior.
    Keywords: Flypaper Effect,Local Government Expenditure,Transfers to Municipalities,Local Taxation
    JEL: H21 H70 H71 H72 H77
    Date: 2016
  4. By: Elenka Brenna (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Lara Gitto
    Abstract: There is a general consensus in considering the public financing for LTC as a suitable proxy of the resources committed to elderly care by each Government. But the preciseness of this approximation depends on the extent to which LTC is representative of elderly care within a country. We investigate this issue by estimating the resources specifically spent on elderly assistance in Lombardy, an Italian region which in terms of population, dimension, health care organization and economic development could be compared to many European countries, such as Sweden, Austria or Belgium. The analysis focuses on the public financing on elderly care in Italy and, in particular, in Lombardy, both in terms of organizational level (central/regional/local) and governmental responsibility (Welfare/Social Department). Quantitative data on the financing of elderly care is drawn from the national and regional balances; the provision of services is analyzed using regional and community based data. Results address two main questions. First, they highlight the absence of an appropriate method for assessing the public resources committed by each European country to LTC elderly expenditure. Second, our findings suggest an overestimate of the funding actually spent for elderly care in Italy: this should be of warning for policy makers, especially in view of an increasing ageing of the population.
    Keywords: LTC financing; elderly care; European LTC policies.
    JEL: H53 H72 I38
    Date: 2016–08

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