nep-pub New Economics Papers
on Public Finance
Issue of 2019‒07‒15
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Carbon taxes and compensation options By Bercholz, Maxime; Roantree, Barra
  2. The Effects of Traditional Cigarette and E-Cigarette Taxes on Adult Tobacco Product Use By Michael F. Pesko; Charles J. Courtemanche; Johanna Catherine Maclean
  3. The evolution of tax implicit value judgements, redistribution and income inequality in the UK: 1968 to 2015 By van de Ven, Justin; Hérault, Nicolas
  4. Dutch Shell Companies and International Tax Planning By Lejour, Arjan; Mohlmann, Jan; van't Riet, Maarten; Benschop, Thijs
  5. Taxation and Supplier Networks : Evidence from India By Gadenne, Lucie; Nandi, Tushar K.; Rathelot, Roland

  1. By: Bercholz, Maxime; Roantree, Barra
    Date: 2019–06
  2. By: Michael F. Pesko; Charles J. Courtemanche; Johanna Catherine Maclean
    Abstract: We study the effects of traditional cigarette tax rate changes and e-cigarette tax adoption on use of these products among U.S. adults. Data are drawn from the Behavioral Risk Factor Surveillance System and National Health Interview Survey data over the period 2011 to 2017. Using a differences-in-differences model, we find that higher traditional cigarette taxes reduce adult traditional cigarette use and increase adult e-cigarette use, suggesting that the products are economic substitutes. E-cigarette tax adoption reduces e-cigarette use, with some heterogeneity across groups, and dilutes the own-tax responsiveness of traditional cigarettes.
    JEL: H2 I12 I18
    Date: 2019–06
  3. By: van de Ven, Justin; Hérault, Nicolas
    Abstract: An issue of interest in the literature that explores the drivers of inequality is the distributional bearing of tax and transfer policy, where an important theme concerns changes in the relative treatment of alternative population subgroups. We develop an empirical approach for quantifying the value judgements implicit in the relative treatment of demographic subgroups by a tax and transfer system. We apply this approach to UK data reported at annual intervals between 1968 and 2015, documenting remarkable improvements in tax and transfer treatment enjoyed by some population subgroups - particularly families with children and age pensioners - relative to the wider population. We show that accounting for the changing value judgements implicit in tax and transfer policy provides a fresh perspective on the evolution of income inequality and redistribution; one that departs from the prevailing view that UK inequality stopped rising from the early 1990s.
    Keywords: equivalence scale,inequality,redistribution,horizontal equity
    JEL: D31 H23 I38
    Date: 2019
  4. By: Lejour, Arjan (Tilburg University, Center For Economic Research); Mohlmann, Jan; van't Riet, Maarten; Benschop, Thijs
    Abstract: This paper uses the financial statements of special purpose entities (SPEs) for explaining the origin and destination of dividend, interest, and royalty flows passing the Netherlands. We find that Bermuda is the most important destination for royalty flows. These flows come from Ireland, Singapore and the United States. For dividend and interest payments the geographical pattern is more widespread. We find a substantial tax reduction for royalties by using Dutch SPEs compared to a direct flow between the origin and destination country. However, we cannot find such tax savings for dividends and interest with an approximation based on statutory tax rates. When controlling for country characteristics in our regression analysis we do find that tax differentials partially explain the geographical patterns of income flows diverted through the Netherlands. This is the case for the likelihood that a route is used, as well as for the size of the flows. This paper is one of the first using bilateral income flows as dependent variables instead of bilateral FDI stocks or flows.
    Keywords: corporate taxation; international tax planning; treaty shopping; bilateral dividend flows; bilateral interest flows; bilateral royalty flows
    JEL: G32 H25 H32
    Date: 2019
  5. By: Gadenne, Lucie (University of Warwick, Institute for Fiscal Studies and CEPR); Nandi, Tushar K. (CTRPFP, Center for Studies in Social Sciences); Rathelot, Roland (University of Warwick and CEPR)
    Abstract: Do tax systems distort firm-to-firm trade? This paper considers the effect of tax policy on supplier networks in a large developing economy, the state of West Bengal in India. Using administrative panel data on firms, including transaction data for 4.8 million supplier-client pairs, we first document substantial segmentation of supply chains between firms paying Value-Added Taxes (VAT) and non-VAT-paying firms. We then develop a model of firms’ sourcing and tax decisions within supply chains to understand the mechanisms through which tax policy interacts with supply networks. The model predicts partial segmentation in equilibrium because of both supply-chain distortions (taxes affect how much firms trade with each other) and strategic complementarities in firms’ tax choices. Finally, we test the model’s predictions using variations over time within-firm and within supplier-client pairs. We find that the tax system distorts firms’ sourcing decisions, and suggestive evidence of strategic complementarities in firms’ tax choices within supplier networks
    Date: 2019

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