nep-pub New Economics Papers
on Public Finance
Issue of 2020‒01‒13
five papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Investment tax incentives and their big time-to-build fiscal multiplier By Bermperoglou, Dimitrios; Deli, Yota; Kalyvitis, Sarantis
  2. Wealth Taxation in the United States By Edward N. Wolff
  3. Do people really want a simple tax system? Evidence on preferences towards income tax simplification By Blesse, Sebastian; Buhlmann, Florian; Doerrenberg, Philipp
  4. Consumption taxes, income distribution and poverty: Evidence from Kenya By Jochimsen, Beate; Wanyagathi Maina, Anne
  5. Investigating tax culture of the tax payers of the Iranian Tax Administration By Niknamian, Sorush

  1. By: Bermperoglou, Dimitrios; Deli, Yota; Kalyvitis, Sarantis
    Abstract: This paper studies how investment tax incentives stimulate output in a medium-scale DSGE model, which allows for a variety of fiscal financing mechanisms. We find that the horizon following a positive shock in investment tax incentives is crucial. The shock is highly expansionary in the long run, with the relevant fiscal multiplier substantially exceeding 1, but this effect only becomes visible after two to three years. Our analysis indicates that a rise in the marginal product of labor and the demand for labor trigger this expansion, which is an effect that partial equilibrium studies ignore. The results suggest that investment tax incentives are even more effective when nominal wages adjust faster.
    Keywords: private investment incentives,investment tax credit,fiscal multipliers
    JEL: E32 E62 H29
    Date: 2019
  2. By: Edward N. Wolff
    Abstract: The paper analyzes the fiscal effects of a Swiss-type tax on household wealth, with a $120,000 exemption and marginal tax rates running from 0.05 to 0.3 percent on $2,400,000 or more of wealth. It also considers a wealth tax proposed by Senator Elizabeth Warren with a $50,000,000 exemption, a two percent tax on wealth above that and a one percent surcharge on wealth above $1,000,000,000. Based on the 2016 Survey of Consumer Finances, the Swiss tax would yield $189.3 billion and the Warren tax $303.4 billion. Only 0.07 percent of households would pay the Warren tax, compared to 44.3 percent for the Swiss tax. The Swiss tax would have a very small effect on income inequality, lowering the post-tax Gini coefficient by 0.004 Gini points. The effect of the Swiss tax and Warren tax on wealth inequality is miniscule, lowering the Gini coefficient by at most 0.0005 Gini points.
    JEL: D31 H24
    Date: 2019–12
  3. By: Blesse, Sebastian; Buhlmann, Florian; Doerrenberg, Philipp
    Abstract: Using new survey and experimental data for a representative sample of the German population, we study preferences for tax simplification. The general wisdom seems to suggest that most tax systems are overly complex and that tax simplification is generally desirable. Consistent with this general wisdom, we find that more than 90% of our sample believe that the tax system needs to be simplified. However, there also are efficiency and equity arguments in support of a certain degree of tax complexity and it is puzzling why tax systems remain highly complex despite the conventional view in favor of more simplification. The main purpose of our study then is to investigate if the high support for tax simplification is driven by a lack of awareness about the trade-offs behind simple and complex tax systems. Our data show that the support for simplification decreases as we randomly provide economic arguments against simplification and as we ask respondents if the tax system should account for specific differences in living situations (such as costly care of elderly family members). Overall, our findings suggest that the high support for simpler taxes is to some extent driven by a lack of awareness about the implications of tax simplification.
    Keywords: Tax Complexity,Preferences Towards Tax Simplification,Randomized Survey Experiment
    JEL: H2 D72 C9
    Date: 2019
  4. By: Jochimsen, Beate; Wanyagathi Maina, Anne
    Abstract: No Poverty' and 'Reduced Inequalities' are two out of the 17 sustainable development goals of the United Nations. Nowadays, Kenya faces high levels of poverty and inequality: 36 percent of the population live below the poverty line and the Gini coefficient was 0.445 in 2015. Against this background, this paper investigates how consumption taxes can be used to reduce poverty and promote income equality in Kenya. Using econometric models we show the effect of consumption taxes on income inequality and on GDP per capita. In line with the literature, our findings confirm that consumption taxes are regressive. Thus, fiscal policy could reduce this consequence by using differentiated tax rates with lower rates applied to basic goods on which the poor spend a higher share of their disposable income. In Kenya, consumption tax revenue is positively related to the GDP per capita. This might point to a successful fiscal policy in Kenia that uses consumption tax revenue to provide essential facilities for the poor leading to an increase of overall welfare.
    Keywords: consumption taxes,income inequality,poverty,Kenya,Verbrauchssteuer,Einkommensungleichheit,Armut
    JEL: H29 O55 O43 I32
    Date: 2019
  5. By: Niknamian, Sorush
    Abstract: The purpose of this study is to investigate the tax culture of tax payers in the Iranian Tax Administration. This was an applied-descriptive survey study. The statistical population was divided into three groups according to the share of tax revenue in 2017 and 12 provinces from 31 provinces selected by cluster and quota sampling. The sample size was calculated using the Cochran formula for a large population of 690 people for each group. A questionnaire was used to collect data. The content validity of the questionnaires was confirmed by the experts and the construct validity was verified by factor analysis. The reliability of the questionnaires was also calculated using Cronbach's alpha (0.925). The data were analyzed using correlation coefficient, mean test and factor analysis using the Structural Equation Modeling in LISREL. The results showed that each of the components of the tax culture of the tax payers was higher than satisfactory.
    Date: 2019–12–28

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