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on Public Finance |
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Issue of 2018‒02‒19
six papers chosen by |
| By: | Hunt Allcott; Benjamin Lockwood; Dmitry Taubinsky |
| Abstract: | An influential result in modern optimal tax theory, the Atkinson and Stiglitz (1976) theorem, holds that for a broad class of utility functions, all redistribution should be carried out through labor income taxation, rather than differential taxes on commodities or capital. An important requirement for that result is that commodity taxes are known and fully salient when consumers make income-determining choices. This paper allows for the possibility consumers may be inattentive to (or unaware of) some commodity taxes when making choices about income. We show that commodity taxes are useful for redistribution in this setting. In fact, the optimal commodity taxes essentially follow the classic “many person Ramsey rule” (Diamond 1975), scaled by the degree of inattention. As a result, to the extent that commodity taxes are not (fully) salient, goods should be taxed when they are less elastically consumed, and when they are consumed primarily by richer consumers. We extend this result to the setting of corrective taxes, and show how nonsalient corrective taxes should be adjusted for distributional reasons. |
| JEL: | H21 H23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24233&r=pub |
| By: | Cato, Susumu; Matsumura, Toshihiro |
| Abstract: | We investigate the optimal tax and privatization policies in a mixed oligopoly in which a state-owned public firm competes against private firms in a free-entry market. First, we investigate the domestic private firm case. The optimal tax rate is strictly positive except for the full privatization and full nationalization cases, and the relationship between the optimal tax rate and degree of privatization is inverted U-shaped. Further, the optimal degree of privatization is decreasing in the tax rate. Next, we investigate the foreign private firm case and find that the two policies are mutually independent. |
| Keywords: | industrial policy; privatization; free entry; unit tax-subsidy; foreign ownership |
| JEL: | H42 H44 L13 |
| Date: | 2017–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82893&r=pub |
| By: | Michelle Harding; Melanie Marten |
| Abstract: | This paper presents statutory tax rates on several forms of capital income, including dividends, interest on bonds and bank accounts, and capital gains on shares and real property, including integration between the corporate and personal levels. It updates the rates from an earlier tax working paper (Harding, 2013) and extends the analysis to consider the debt-equity bias of the tax system when the personal level of taxation is considered. |
| Keywords: | Capital income taxation, Debt-equity bias |
| Date: | 2018–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ctpaaa:34-en&r=pub |
| By: | Salvador Barrios; Mathias Dolls; Anamaria Maftei; Andreas Peichl; Sara Riscado; Janos Varga; Christian Wittneben |
| Abstract: | In this paper, we present the first dynamic scoring exercise linking a microsimulation and a dynamic general equilibrium model for Europe. We illustrate our novel methodology analysing hypothetical reforms of the social insurance contributions system in Belgium. Our approach takes into account the feedback effects resulting from adjustments and behavioral responses in the labor market and the economy-wide reaction to the tax policy changes, essential for a comprehensive evaluation of the reforms. We find that the self-financing effect of a reduction in employers’ social insurance contribution is substantially larger than that of a comparable reduction in employees’ social insurance contributions. |
| Keywords: | Tax Reform, European Union. |
| JEL: | H20 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_251&r=pub |
| By: | Clemens Fuest; Samina Sultan |
| Abstract: | This paper develops a model of tax competition with three countries, which initially form a union where countries refrain from using different tax rates in different sectors of the economy. We study the impact of one country leaving the union. We show that the introduction of discriminatory taxation in one country increases tax policy heterogeneity within the remaining union. Moreover, the incentives for the two remaining countries to harmonize their tax rates decline. We discuss these results in the context of the debate about the tax policy implications of Brexit. |
| Keywords: | International taxation, tax competition, preferential tax regimes |
| JEL: | H20 H73 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ifowps:_248&r=pub |
| By: | Andrew J. Bibler; Keith F. Teltser; Mark J. Tremblay |
| Abstract: | Tax enforcement can be prohibitively costly when market transactions and participants are difficult to observe. Evasion among market participants may reduce tax revenue and provide certain types of suppliers an undue competitive advantage. Whether efforts to fully enforce taxes are worthwhile depends on the rate of compliance in the absence of such efforts. In this paper, we show that an upper bound on pre-enforcement tax compliance can be obtained using market data on pre- and post-enforcement periods. To do this, we estimate the pass-through of tax enforcement agreements between the largest online short-term housing rental platform and state and local governments, which achieve full compliance at the point of sale. Using transaction-level data on Airbnb listings across a number of U.S. metropolitan areas, as well as variation in enforcement agreements across time, location, and tax rate, we estimate that taxes are paid on no more than 23 percent of Airbnb transactions prior to enforcement. We also provide insight on demand- and supply-side responses to taxation in online and sharing economy marketplaces, as well as the potential associated inefficiencies. |
| Keywords: | tax compliance, evasion, enforcement, short-term housing rentals, sharing economy, Airbnb |
| JEL: | H20 H22 H26 L10 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2018-06&r=pub |