nep-pub New Economics Papers
on Public Finance
Issue of 2017‒11‒12
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Taxing high-income earners: Tax avoidance and mobility By Alejandro Esteller-Moré; Amedeo Piolatto; Matthew D. Rablen
  2. Family Tax Policy with Heterogeneous Altruistic Households By Lucia Granelli
  3. Automation and inequality with taxes and transfers By Rod Tyers; Yixiao Zhou
  4. Corporate Tax Competition in the Presence of Unemployment By MORITA Tadashi; OGAWA Yoshitomo; ONO Yoshiyasu
  5. International taxation and M&A prices By von Hagen, Dominik; Pönnighaus, Fabian Nicolas
  6. Examining Taxation of Fiat Money and Bitcoins Vis-A-Vis Regulated Cryptocurrencies By Hegadekatti, Kartik; S G, Yatish
  7. Trump's tax reform plan: a short overview By Luigi Bernardi
  8. Tax Pass-through in the European Beer Market By Aria Ardalan; Sebastian G. Kessing

  1. By: Alejandro Esteller-Moré (IEB, Universitat de Barcelona); Amedeo Piolatto (IEB, Universitat de Barcelona); Matthew D. Rablen (University of Sheffield)
    Abstract: The taxation of high-income earners is of importance to every country and is the subject of a considerable amount of recent academic research. Such high-income earners contribute substantial amounts of tax and generate significant positive spillovers, but are also highly mobile: a 1% increase in the top marginal income tax rate increases outmigrations by around 1.5 to 3%. We review research into taxation of high-income earners to provide a synthesis of existing theoretical and empirical understanding. We offer various avenues for potential future theoretical and empirical research.
    Keywords: High-income earners, mobility, tax avoidance
    JEL: H26 H31 K34 K42
    Date: 2017–11
  2. By: Lucia Granelli (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper presents a general equilibrium model, with overlapping generations and heterogeneous altruistic households. Taking into account the heterogeneity of households allows one to develop an alternative framework to explain why empirical estimations find pro-nativist fiscal subsidies to have only a small aggregate effect on the fertility rate of an economy, while fiscal subsidies have a larger effect on the fertility of the households who are their beneficiaries, as generally highlighted by theoretical models on fertility decisions. On the basis of this framework, different policy experiments are performed. First, an increase in pro-nativist fiscal subsidies is targeted only to the households having the lowest initial level of labour income; second, an increase in pro-nativist fiscal subsidies is generalized to all the groups of households; and, third, a change in the tax rate on the inter-generational transfers left by households with the highest labour income is assessed as a policy tool alternative to the use of pro-nativist fiscal subsidies.
    Date: 2017–11–03
  3. By: Rod Tyers; Yixiao Zhou
    Abstract: The dependence of real income and inequality on changes in factor abundance, total factor productivity, factor bias, the relative cost of capital goods and the progressivity of the tax system are quantified using an elemental general equilibrium model with three households. Observed declines in low-skill labour shares are shown to have been generic in the OECD and to have been responsible for most of the increase in US inequality between 1990 and 2016. The widely anticipated future twist away from low-skill labour toward capital is then examined, in combination with expected changes in population and its skill composition. With downward rigidity of low-skill wages the potential is identified for unemployment to rise to extraordinarily high levels. Productivity growth at twice the pace since 1990 is shown to limit this, though it does not slow the concentration of income. The superior policy response is shown to be a generalization of the US “earned income tax credit” system, with financing from taxes on consumption, rather than capital income.
    Keywords: Automation, income distribution, tax, transfers, general equilibrium analysis.
    JEL: C68 D33 D58 O33
    Date: 2017–11
  4. By: MORITA Tadashi; OGAWA Yoshitomo; ONO Yoshiyasu
    Abstract: We analyze the corporate tax competition between two countries in a two-sector model in which one sector is an oligopoly and oligopolists can choose their location between the two countries. Importantly, our model considers imperfect labor markets, where the wage rates in both countries are fixed, causing unemployment to appear. Under such framework, we show that a unique and stable Nash equilibrium of corporate taxes exists and discuss the properties of the equilibrium tax rates. We also examine the relation between the wage rates and equilibrium tax rates as well as that between the share of equities for oligopoly profits and equilibrium tax rates.
    Date: 2017–11
  5. By: von Hagen, Dominik; Pönnighaus, Fabian Nicolas
    Abstract: We show that corporate taxation systems regarding foreign dividends and capital gains across 49 countries differ in many aspects, contradicting the requirements for capital ownership neutrality and indicating that ownership patterns are distorted. Consequently, a national tax policy maker may ask which taxation system improves the position of its multinational entreprises in bidding for foreign targets. To address this question, we develop a theoretical model on the impact of foreign dividends and capital gains taxation on cross-border M&A prices from the acquirer's perspective and theoretically compare different taxation systems. In a next step, we empirically validate our model in a regression analysis on a large cross-border M&A data set. Based on this analysis, we find that foreign dividends taxation rather than capital gains taxation impacts M&A prices. Finally, we provide tax policy suggestions.
    Keywords: International taxation,Repatriation taxes,Capital gains taxes,Lock-in effect,Multinational entities,Cross-border M&As
    JEL: F23 G34 H25 H26 H32 H73
    Date: 2017
  6. By: Hegadekatti, Kartik; S G, Yatish
    Abstract: In this paper, we examine the Taxation aspects of Fiat money and Bitcoins vis-a-vis Regulated Cryptocurrencies. We start off by briefly explaining the concept of cryptocurrencies (also referred to as cryptocoins in this paper). We then discuss the concept of Regulated and Sovereign Backed Cryptocurrencies (RSBCs). Then we envisage a scenario where cryptocoins are the main medium of exchange. The taxation aspects of Paper money, Bitcoins and RSBCs are then deliberated with the pros and cons of taxation for each currency format. The currency that can support an Automated Tax Regime is also debated. Finally, the paper concludes by arranging in ascending order, the currencies which are easily amenable to and compliant with taxation policies and laws.
    Keywords: Taxation, Bitcoins, K-Y Protocol, NationCoins, RSBC
    JEL: E42 E52 H21 H24 H26
    Date: 2016–10–02
  7. By: Luigi Bernardi (Università di Pavia)
    Abstract: Since the 2016 electoral campaign, the President elect of the USA, Donald Trump, has presented a broad Plan for reducing taxes. This Plan centres on a reduction in Federal income tax rates for both individuals and businesses. The main underlying argument (in keeping with Republican tradition) in support of the Plan, is that taxes are harmful to economic growth. This short paper firstly presents a summary of the changes in tax structure suggested by the Plan. This is followed by a discussion of the three main critical and arguable points of the Plan (budget neutrality, distributional consequences and macroeconomic effects), also through a review of the most recent studies regarding this topic. The prevailing view is that the Plan might boost economic growth, but only at the price of a huge budget deficit, while it may well favour only the wealthiest taxpayers in the USA.
    Keywords: Taxation, Donald Trump’s tax plan
    JEL: H2 H20 H24 H25 H26
    Date: 2017–10
  8. By: Aria Ardalan (University of Siegen); Sebastian G. Kessing (University of Siegen and CESifo)
    Abstract: We study the pass-through of indirect taxes on beer prices in the European Union (EU). Exploiting the variation of value added tax rates, beer excise tax rates, and beer prices in a panel of monthly data from 1996 to 2016 of all current 28 EU member states, we estimate the tax pass-through of specific beer excise taxes and ad valorem value added taxes, respectively. Ad valorem taxes are under-shifted at a rate of approximately 70%. Specific excise taxes are almost fully shifted to prices in the EU, but, in contrast to the empirical findings for the US, there is no evidence of over-shifting. Nevertheless, the difference between ad valorem and specific tax pass-through rates indicates that imperfect competition plays an important role in the European beer market.
    Keywords: Tax incidence, Pass-through, VAT, Excise Taxes, EU.
    JEL: H22 H23
    Date: 2017

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