nep-pub New Economics Papers
on Public Finance
Issue of 2019‒03‒18
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Time-saving Goods, Time Inequalities, and Optimal Taxation By Cristian F. Sepulveda
  2. Public Infrastructure Provision in the Presence of Terms-of-Trade Effects and Tax Competition By Karl Zimmermann
  3. On the Maximum Number of Players Voluntarily Contributing to Two or More Public Goods By Nakagawa, Shintaro
  4. Top Income Tax Evasion and Redistribution Preferences: Evidence from the Panama Papers By Laila Ait Bihi Ouali

  1. By: Cristian F. Sepulveda (Farmingdale State College, SUNY, USA)
    Abstract: Time-saving goods are defined as market goods that reduce home labor requirements (e.g. restaurants; washing machines). Assuming that time savings are costly, this paper shows that lower-income individuals can purchase fewer time savings and enjoy less leisure time. Commodity tax rates affecting low-income individuals should depend more on time savings, and less on the classic Corlett and Hague rule. The related literature suggests to impose lower tax rates on goods that require less home labor. This paper shows that goods that offer greater time savings with respect to their more affordable substitutes should also receive favorable tax treatment.
    Date: 2019–03
  2. By: Karl Zimmermann
    Abstract: This paper analyses and compares the performance of carbon taxes and capital taxes in financing public goods with positive effects on private firm productivity. It is motivated by Franks et al. (2017), who ask whether using carbon taxes could be motivated on fiscal grounds rather than by environmental ones, arguing that the advantage of the carbon tax consists in its potential to reap foreign resource rents. I employ an analytical general equilibrium framework of n identical countries, where local firms use internationally mobile capital and imported fossil fuel and in production as well as local public infrastructure. The latter is financed solely by either taxing the input of fossil fuels (carbon tax) or capital. The choice of the policy instrument is exogenous to policy makers and symmetric across countries. I find that the effect of policy on the fossil fuel price (terms-of-trade effect) leads to higher public good provision under carbon taxation. However, tax-competition could cause either policy instrument to yield higher provision depending on how strongly either tax base reacts to changes in the tax rate. And finally, I conclude that the ranking of the two policy scenarios is ambiguous when considering tax competition and the terms-of-trade effect simultaneously. A numerical exercise shows cases for higher provision of either policy.
    Keywords: Tax Competition,Public Infrastructure,Carbon Tax
    JEL: H21 H54 Q38
    Date: 2019
  3. By: Nakagawa, Shintaro
    Abstract: Cornes and Itaya (2010) showed that in a two-player game of voluntary provision of two public goods if the players have different preferences, and if both players simultaneously make positive contributions to both public goods, the system of equations representing the Nash equilibrium is overdetermined. We extend this proposition to a model of voluntary provision of two or more public goods and show that if the players have different preferences, and if the number of players who contribute simultaneously to two or more public goods is more than the number of public goods, the system representing the Nash equilibrium is overdetermined. This result implies that in a large group, the share of players contributing to multiple public goods may well be quite small and the majority of the players may contribute to at the most one public good.
    Keywords: Voluntary provision; multiple public goods
    JEL: H41
    Date: 2019–03–15
  4. By: Laila Ait Bihi Ouali (Aix-Marseille Univ., CNRS, EHESS, Centrale Marseille, AMSE)
    Abstract: This paper provides empirical evidence that, after fiscal scandals, individuals substantially revise their views on redistribution. I exploit as a quasi-natural experiment the 2016 Panama Papers scandal which revealed top-income tax evasion behaviour simultaneously worldwide. The empirical investigation relies on two original sources of data: a longitudinal dataset on United Kingdom households and a survey conducted in twenty-two European countries. Using a difference-in-differences strategy, I find an increase in pro-redistribution statements post-scandal ranging between 2% and 3.3%. Responses are heterogeneous on income levels and on political affiliations, with larger responses from right-wing individuals. The change in redistribution preferences is moderately translated into votes: I find an increase in voting intentions for the left and negative for the right-wing parties. Complementary estimations at the European-level indicate that pro-redistribution responses increase with media coverage and shock intensity (i.e., number of individuals involved).
    Keywords: Panama Papers, Tax evasion, tax avoidance, Redistribution, tax morale, Inequality, mass media
    JEL: D63 H24 H26
    Date: 2019–01

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