nep-pub New Economics Papers
on Public Finance
Issue of 2021‒02‒08
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Optimality of tax policy on the basis of comparative analysis of income taxation By Abuselidze, George
  2. Decentralization and Progressive Taxation By Simin Berset; Mark Schelker
  3. Taming Private Leviathans: Regulation versus Taxation By Rabah Arezki; Asif Islam; Grégoire Rota-Graziosi
  4. What Makes a Tax Evader? By Marcelo L. Bergolo; Martin Leites; Ricardo Perez-Truglia; Matias Strehl
  5. The Accuracy of Tax Imputations: Estimating Tax Liabilities and Credits Using Linked Survey and Administrative Data By Bruce D. Meyer; Derek Wu; Grace Finley; Patrick Langetieg; Carla Medalia; Mark Payne; Alan Plumley
  6. The Impact of R&D tax incentives in Portugal By Rita Bessone Basto; Ana Martins; Guida Nogueira
  7. Heterogeneous price and quantity effects of the real estate transfer tax in Germany By Christofzik, Désirée I.; Feld, Lars P.; Yeter, Mustafa

  1. By: Abuselidze, George
    Abstract: This paper is to determine the optimality of taxation based on a comparative analysis of income taxation in developed and developing countries. In our opinion, the main idea of income tax should be the optimal distribution of tax literacy on the basis of a direct definition of income of taxpayers or progressive taxation. The theoretical and methodological basis of the research is the main provisions of the market economy, classical and modern tax theories, legislative and regulatory acts of foreign countries. The main part of the empirical material is from 2002 to 2017. In the process of analysis of the actual material, together with the general scientific method of research, is used: Comparative and systemic analysis, analogy, statistical data monitoring and other methods. The comparative and systemic analysis will give us an opportunity to reveal and evaluate the ways of perfection. Analogy and comparative analysis is based on variables and features, such as the of income taxes structure, withdrawal rules, rates, tax base. Data from several studies suggest that concept tries to explain the named phenomena by the way of fundamental analyzing of the statistic data received from multiple statistic observation. Previous analyses of tax rates tend to support the hypothesis that developed countries emphasize the importance of fairness, while developing countries are mainly focused on mobilizing budget revenues and lesser consideration of fair taxation principles, since the tax system performs a fiscal function more effectively than developing countries.
    Keywords: Tax policy; Income tax; Tax burden; Budget; Well-being
    JEL: H11 H21 H24 H30 H61
    Date: 2020
  2. By: Simin Berset; Mark Schelker
    Abstract: The traditional normative literature on fiscal federalism argues that redistributive policies should be centralized in order to avoid welfare- or tax-induced migration. However, recent evidence shows that even in a setup where the progressivity of the income tax schedule is centralized to an upper-layer government and local governments are involved in tax competition with only a tax shifter, local mobility induces income sorting. Hence, despite centralized redistributive taxation, the resulting effective tax schedule is less progressive than what is set in the tax code. We argue that upper-layer governments anticipate the impact of local income sorting and strategically adjust their statutory tax schedules. We analyze Swiss panel data and apply causal machine learning methods to identify the effects of decentralization on the statutory tax structure. We provide evidence that more decentralized cantons reduce the tax burden for lower and intermediate income classes and hence implement more redistributive statutory tax schedules. This strategic adjustment is limited by the mobility of the tax base.
    Keywords: fiscal federalism, decentralized taxation, redistribution, progressive income taxes
    JEL: H73 H77 H71
    Date: 2021
  3. By: Rabah Arezki; Asif Islam; Grégoire Rota-Graziosi
    Abstract: This paper explores the interplay between top wealth and policies namely regulation and taxation exploiting variation in exposure to international commodity prices. Using a global panel dataset of billionaire’s net worth, results point to a positive relationship between commodity prices and the concentration of wealth at the top. Regulation especially pertaining to competition is found to limit the effects of commodity price shocks on top wealth concentration while taxation has little effect. Moreover, commodity price shocks crowd out non-resource tax revenue hence limiting the scope for income transfers and redistribution. Results are consistent with the primacy of ex ante interventions over ex post ones to address top wealth inequality.
    Keywords: inequality; wealth concentration, competition, tax, natural resources, development
    JEL: D31 D63 H26 H20 O13
    Date: 2021–01–27
  4. By: Marcelo L. Bergolo; Martin Leites; Ricardo Perez-Truglia; Matias Strehl
    Abstract: Why do some individuals choose to evade taxes while others do not? One popular view is that some individuals cheat on their taxes because they are more dishonest, selfish, or perceive different social norms. There is, however, little direct evidence on this matter. In collaboration with the national tax agency in Uruguay, we address this question using a combination of surveys and administrative records. Leveraging a unique institutional setting, we measure individual-level evasion choices. We document significant variation in evasion decisions across individuals. For a subsample of 6,078 taxpayers, we use survey questions and incentivized laboratory games to measure traits such as honesty, selfishness, and perceived social norms. We find that these individual traits have some power to predict who evades taxes, but other factors, such as the environment, play a much bigger role.
    JEL: H24 H26 K42 Z1 Z13
    Date: 2020–12
  5. By: Bruce D. Meyer; Derek Wu; Grace Finley; Patrick Langetieg; Carla Medalia; Mark Payne; Alan Plumley
    Abstract: This paper calculates accurate estimates of income and payroll taxes using a groundbreaking set of linked survey and administrative tax data that are part of the Comprehensive Income Dataset (CID). We compare our estimates to survey imputations produced by the Census Bureau and those generated using the TAXSIM calculator from the National Bureau of Economic Research. The administrative data include two sets of Internal Revenue Service (IRS) data: (1) a limited set of tax information for the population of individual income tax returns covering selected line items from Forms 1040, W-2, and 1099-R; and (2) an extensive set of population tax records processed by the IRS in 2011, covering nearly every line item on Form 1040 and most lines on a series of third-party information returns. We link these IRS records to the Current Population Survey Annual Social and Economic Supplement (CPS) for reference year 2010. We describe how we form tax units and estimate various types of tax liabilities and credits using these linked data, providing a roadmap for constructing accurate measures of taxes while preserving the survey family as the sharing unit for distributional analyses. We find that aggregate estimates of various tax components using the limited and extensive tax data estimates are close to each other and much closer to public IRS tabulations than either of the imputations using survey data alone. At the individual level, the absolute errors of survey-only imputations of federal income taxes and total taxes are on average 10% and 13%, respectively, of adjusted gross income. In contrast, the limited tax data imputations yield mean absolute errors for federal income taxes and total taxes that are about 2% and 3% of adjusted gross income, respectively. For the Earned Income Tax Credit, the limited tax data imputation is off by less than $20 on average for a typical family (compared to more than $500 using either of the survey-only imputations).
    JEL: C42 C81 H20 H24 I32
    Date: 2020–12
  6. By: Rita Bessone Basto (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Ana Martins (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Guida Nogueira (Research Office of the Portuguese Ministry of the Economy and Digital Transition)
    Abstract: The competitiveness of an economy increasingly depends on its ability to innovate. Theory suggests that innovation makes an important contribution to growth both at the firm level and at the national level. Innovative economies that deliver new differentiated products and services and/or develop more efficient production processes are often more productive, more resilient and adaptable in the face of adversity and change, and better able to support higher living standards and thus greater well-being. However, because knowledge is a public good, without government support, private agents are likely to underinvest in R&D, as it usually leads to higher social returns than private ones. In this context, it is strategically important to use public funds to promote innovative activity in firms to achieve the optimal level of R&D investment. Since 2000, indirect public support through tax credits has become more prominent and is currently the main form of public R&D support for most OECD countries. This paper evaluates the impact of SIFIDE, the Portuguese system of tax incentives to corporate R&D investment, on firms’ behaviour. The results show the effectiveness of SIFIDE in promoting investment in R&D, both through the impact of the program on intangible investment and on R&D staff.
    Keywords: R&D tax credits, Innovation, BERD, SIFIDE, Propensity score matching, Differences-in-Differences.
    JEL: O31 O32 H25 H32 C31
    Date: 2021–01
  7. By: Christofzik, Désirée I.; Feld, Lars P.; Yeter, Mustafa
    Abstract: Using quarterly data for German counties, we study how housing prices and offers respond to higher transaction costs induced by tax increases. Since 2006, states can set their own tax rates on real estate transfers. Several and substantial tax hikes generate variation across time and states which we exploit in our empirical analysis using an event study design. Our results indicate that prices and offers decrease significantly by 3% and 6% already in the quarter in which the tax increase is announced in press but rise subsequently. Furthermore, we find heterogeneous responses when distinguishing between different types of counties. Housing prices decrease persistently in shrinking counties, while this is at most temporarily the case in growing, central and peripheral counties. This implies that the economic incidence of this tax varies across transactions.
    Keywords: Real estate transfer tax,real estate prices,housing market,tax incidence,anticipation effects
    JEL: H20 H22 H71 R32 R38
    Date: 2020

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