nep-pub New Economics Papers
on Public Finance
Issue of 2018‒07‒30
six papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimal Capital Taxation Revisited By Chari, V. V.; Nicolini, Juan Pablo; Teles, Pedro
  2. Do the rich pay their taxes early? By Andreas M. Fischer; Lucca Zachmann
  3. The Aggregate Consequences of Tax Evasion By Alessandro Di Nola; Georgi Kocharkov; Almuth Scholl; Anna-Mariia Tkhir
  4. Combatting Tax Evasion: Evidence from Comparing Commercial and Business Tax Registry By Collen Lediga; Nadine Riedel; Kristina Strohmaier
  5. Tax Reform for Low Income Countries: Five Ideas for Simplifying Tax Systems to Fit Local Realities By Prichard, Wilson; Moore, Mick
  6. Local Taxation and Tax Base Mobility: Evidence from a business tax reform in France By Tidiane Ly; Sonia Paty

  1. By: Chari, V. V. (Federal Reserve Bank of Minneapolis); Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis); Teles, Pedro (Banco de Portugal)
    Abstract: We revisit the question of how capital should be taxed, arguing that if governments are allowed to use the kinds of tax instruments widely used in practice, for preferences that are standard in the macroeconomic literature, the optimal approach is to never distort capital accumulation. We show that the results in the literature that lead to the presumption that capital ought to be taxed for some time arise because of the initial confiscation of wealth and because the tax system is restricted.
    Keywords: Capital income tax; Long run; Uniform taxation
    JEL: E60 E61 E62
    Date: 2018–07–06
    URL: http://d.repec.org/n?u=RePEc:fip:fedmwp:752&r=pub
  2. By: Andreas M. Fischer; Lucca Zachmann
    Abstract: This paper examines the effects of household income on interest credits from early tax payments. The hypothesis that the richest households from high-income municipalities pay their income taxes early is tested in a demand specification for interest credit for early tax payments. The empirical analysis uses regional data from 170 municipalities in the canton of Zurich from 2007 to 2013. A one standard deviation increase in the ratio for household income between the mean and the 75th percentile increases the ratio of interest tax credit to total taxes by 5%. The finding that high-income households pay their taxes early supports the view that institutional arrangements supporting early tax payments make the (effective) tax system more regressive for high-income households.
    Keywords: Early tax payment, demand for interest credit on early tax payment
    JEL: D14 D30 E21 E41 H31
    Date: 2018
    URL: http://d.repec.org/n?u=RePEc:snb:snbwpa:2018-08&r=pub
  3. By: Alessandro Di Nola (University of Konstanz); Georgi Kocharkov (Goethe University Frankfurt); Almuth Scholl (University of Konstanz); Anna-Mariia Tkhir (University of Konstanz)
    Abstract: There is a sizable overall tax gap in the U.S., albeit tax non-compliance differs sharply across income types. While only small percentages of wages and salaries are underreported, the estimated misreporting rate of self-employment business income is substantial. This paper studies how tax evasion in the self-employment sector affects aggregate outcomes and welfare. We develop a dynamic general equilibrium model with incomplete markets in which heterogeneous agents choose between being a worker or self-employed. Self-employed agents may hide a share of their business income but face the risk of being detected by the tax authority. Our model replicates important quantitative features of the U.S. economy in terms of income, wealth, self-employment, and tax evasion. Our quantitative ndings suggest that tax evasion leads to a larger self-employment sector but it depresses the average size and productivity of self-employed businesses. Tax evasion generates positive aggregate welfare effects because it acts as a subsidy for the self-employed. Workers, however, suffer from substantial welfare losses.
    Keywords: Tax evasion, Self-employment, Wealth inequality, Tax policy
    JEL: H24 H25 H26 C63 E62 E65
    Date: 2018–07–26
    URL: http://d.repec.org/n?u=RePEc:knz:dpteco:1806&r=pub
  4. By: Collen Lediga; Nadine Riedel; Kristina Strohmaier
    Abstract: In 2008 and 2014, the South African Revenue Service (SARS) did snapshot synchronizations of its business tax registry with the country’s commercial register in an attempt to identify firms that are non-compliant with their obligation to register with SARS for business tax purposes. We analyse these interventions drawing on SARS’s business tax registry and the population of business tax returns between 2009 and 2014. Several findings emerge. First, in both years, the comparisons resulted in the identification of around 300,000 non-compliant taxpayers, providing prima facie evidence of significant extensive-margin tax evasion. The interventions significantly raised South African business tax revenues in the following years despite the fact that the identi-fied ‘extensive-margin evaders’ exhibit a lower propensity to submit tax returns and, conditional on return submission, report less income than comparable entities that voluntarily registered with SARS. The analysis further suggests that the observed gap in reported taxable income relates to underlying differences in firm size and corporate profitability rather than intensive-margin tax evasion. In line with ‘missing middle theories’, extensive-margin evaders that submit tax returns are, moreover, found to exhibit increased sales and asset growth after their forced registration with SARS.
    Keywords: tax evasion, less developed countries, tax administration
    JEL: H20 H70
    Date: 2018
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_7117&r=pub
  5. By: Prichard, Wilson; Moore, Mick
    Abstract: There is no silver bullet to strengthen the tax systems of low-income countries. Dramatic changes in tax systems and tax collection are rare. Successful improvements more often involve a great deal of hard and steady work, and the gradual construction of popular trust and (grudging) support for reform. There remains, however, space for ‘organising ideas’ that can help identify potentially underexplored and underexploited opportunities for reform.
    Keywords: Governance,
    Date: 2018
    URL: http://d.repec.org/n?u=RePEc:idq:ictduk:13830&r=pub
  6. By: Tidiane Ly (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Sonia Paty (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper investigates the impact of tax base mobility on local taxation. We first develop a theoretical model in order to examine the connection between local business property taxation and tax base mobility within a metropolitan area. We find that decreasing capital intensity in the tax base increases the business property tax rates unambiguously. We then test this result using a French reform, which changes the composition of the main local business tax base in 2010. Estimations using Difference-inDifferences show that the reduction in the mobility of the tax base indeed results in higher business property tax rates. Housing tax rates were not affected by the reform.
    Keywords: Local taxation,Tax base mobility,Tax competition,Difference-in-Differences
    Date: 2018
    URL: http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01812611&r=pub

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