nep-pub New Economics Papers
on Public Finance
Issue of 2017‒01‒01
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Non-Welfarist Income Taxation for Inequality and Polarization Reduction By Vincenzo Prete; Alessandro Sommacal; Claudio Zoli
  2. Tax compliance costs: Cost burden and cost reliability By Eichfelder, Sebastian; Hechtner, Frank
  3. Household Economic Shocks Increase Retirement Wealth Inequality By Teresa Ghilarducci; Siavash Radpour; Bridget Fisher; Anthony Webb
  4. Does Inequality Constrain the Power to Tax? Evidence from the OECD By Md. Rabiul Islam; Jakob Brochner Madsen; Hristos Doucouliagos
  5. The redistributive function of the EU budget By Paolo Pasimeri; Stéphanie Riso
  6. Effects of Increased Competition on Quality of Primary Care in Sweden By Dietrichson, Jens; Ellegård, Lina Maria; Kjellsson, Gustav

  1. By: Vincenzo Prete (Department of Economics (University of Verona)); Alessandro Sommacal (Department of Economics (University of Verona)); Claudio Zoli (Department of Economics (University of Verona))
    Abstract: We adopt a non-welfarist approach to investigate the effect of different redistributive objectives on the shape of the optimal tax schedule. We consider inequality and income polarization reduction objectives and we identify socially desirable three brackets piecewise linear tax systems that allow to collect a given revenue. The optimal tax problem is formalized as the maximization of families of rank-dependent social evaluation function defined over net incomes. These functions allow to incorporate within the same social evaluation model concerns for inequality and for polarization reduction. Both with fixed and variable labour supply the optimal tax schemes substantially differ as the focus moves from the reduction of inequality to the one of polarization. In the case of inequality concerns the optimal tax system is mainly convex exhibiting increasing marginal tax rates unless when labour supply elasticities are higher. While in case of polarization concerns the optimal tax scheme is not-convex with reduced marginal tax rate for the upper income bracket.
    Keywords: Non welfarism, Rank-dependent social evaluation function, Optimal Taxation, Inequality, Polarization.
    JEL: D31 D63 H21
    Date: 2016–12
  2. By: Eichfelder, Sebastian; Hechtner, Frank
    Abstract: As documented by empirical research, tax compliance costs are a considerable burden for private businesses. However, cost estimates may be biased due to survey non-response and questionnaire framing effects. This paper investigates the impact of both aspects on cost estimates. We do not find significant evidence for a non-response bias. By contrast, our results indicate that framing effects regarding the temporal dimension of cost measurement (temporal framing effects) might alter cost estimates by about 39 percent downwards (65 percent upwards) on average and by up to 53 percent downwards (respectively 112 percent upwards) for small businesses. We also test a number of cost drivers with a focus on e-government features. We do not find any evidence that the use of Belgian e-government applications in 2002 and 2004 significantly reduced compliance costs.
    Keywords: compliance cost measurement,cost measurement error,cost drivers,non-response bias,temporal framing,e-filing,e-government
    JEL: C81 H21 H25 M41
    Date: 2016
  3. By: Teresa Ghilarducci; Siavash Radpour; Bridget Fisher; Anthony Webb (Schwartz Center for Economic Policy Analysis (SCEPA))
    Abstract: Economic shocks, such as job-loss, have a particularly adverse effect on the retirement savings of workers in low-income households, exacerbating retirement savings inequality. Low income households are more likely than moderate- and upper-income households to experience economic shocks. Workers in low-income households are also more likely to withdraw from their retirement account after a shock. This study shows that these shocks have significant effects on the finances of low-income households, causing up to a third of all withdrawals, and possibly more.
    Keywords: Retirement, 401(k), GRA, Social Security
    JEL: H55 J26 J32 D63 E21
    Date: 2016–04
  4. By: Md. Rabiul Islam; Jakob Brochner Madsen; Hristos Doucouliagos
    Abstract: We investigate the consequences of income inequality on the income tax-to-GDP ratio for 21 OECD countries over a long time period spanning 1870 to 2011. We use several identification strategies, including using unionization as a new IV for inequality. In contrast to predictions from median voter models, we find that rising inequality significantly depresses the income tax ratio. This finding is robust to alternative measures of inequality, treatment for endogeneity, and model specification. The tax ratio increases with the degree of democracy and openness and decreases with urbanization. Inequality also reduces the indirect tax ratio and alters the tax structure.
    Keywords: Tax ratio; inequality; fiscal policy; OECD
    JEL: H2 E25
    Date: 2016–11
  5. By: Paolo Pasimeri; Stéphanie Riso
    Abstract: This paper measures the net redistributive impact of the EU budget. It finds that for every €1,000 difference in income per capita across countries, €9 is offset by lower contributions to the budget and € 3 is offset by higher expenditures by the budget. The overall equalising effect is small (1.1%) and depends on the revenue side, in particular on the national contribution based on GNI and VAT, which is also the main source of stabilisation. The analysis shows how the various corrections mechanisms applied to the revenue side of the budget reduce its redistributive and stabilisation capacity. The policy conclusions are that on the revenue side, since the national contribution based on GNI is the main source of redistribution and stabilisation), its reduction could reduce the already minimal capacity of the budget to perform these functions. On the expenditure side, the shift from pre-allocated types of expenditures towards non-pre-allocated ones may determine a reduction of the overall redistributive capacity of the budget.
    JEL: E61 E62 H11 H61 H77
    Date: 2016
  6. By: Dietrichson, Jens (The Danish National Centre for Social Research (SFI)); Ellegård, Lina Maria (Department of Economics, Lund University); Kjellsson, Gustav (Department of Economics, University of Gothenburg)
    Abstract: In the last decades, many health systems have implemented policies to make care providers engage in quality competition. But care quality is a multi-dimensional concept, and competition may have different impacts on different dimensions of quality. The empirical evidence on competition and care quality is scarce, in particular regarding primary care. This paper adds evidence from recent reforms of Swedish primary care that affected competition in municipal markets differently depending on the pre- reform market structure. Using a difference-in-differences strategy, we demonstrate that the reforms led to substantially more entry of private care providers in municipalities where there were many patients per provider before the reforms. The effects on primary care quality in these municipalities are modest: we find small improvements in subjective measures of overall care quality, but no significant effects on the rate of avoidable hospitalizations or patients’ satisfaction with access to care. We find no indications of quality reductions.
    Keywords: Competition; Patient choice; Primary health care; Quality
    JEL: D04 H75 I11 I18
    Date: 2016–12–14

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