nep-pub New Economics Papers
on Public Finance
Issue of 2021‒03‒29
eight papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Welfare effects of property taxation By Löffler, Max; Siegloch, Sebastian
  2. Corporate income tax and wages: A meta-regression analysis By Knaisch, Jonas; Pöschel, Carla
  3. Taxes and Turnout: When the Decisive Voter Stays at Home By Felix Bierbrauer; Aleh Tsyvinski; Nicolas Werquin
  4. The Economic Effects of Financing a Large and Permanent Increase in Government Spending: Working Paper 2021-03 By Jaeger Nelson; Kerk Phillips
  5. Women’s Voice on Redistribution: from Gender Norms to Taxation By Monica Bozzano; Paola Profeta; Riccardo Puglisi; Simona Scabrosetti
  6. Beggar-Thy-Neighbour Tax Cuts: Mobility After a Local Income and Wealth Tax Reform in Switzerland By Isabel Martinez
  7. The Zero Effect of Income Tax on the Timing of Birth: Some Evidence on French Data By Nicolas Moreau
  8. What do Italians think about tax evasion? By Giovanni D’Alessio

  1. By: Löffler, Max; Siegloch, Sebastian
    Abstract: We analyze the welfare implications of property taxation. Using a sufficient statistics approach, we show that the tax incidence depends on how housing prices, labor and other types of incomes as well as public services respond to property tax changes. Empirically, we exploit the German institutional setting with 5,200 municipal tax reforms for identification. We find that higher taxes are fully passed on to rental prices after three years. The pass-through is lower when housing supply is inelastic. Combining reduced form estimates with our theoretical framework, we simulate the welfare effects of property taxes and show that they are regressive.
    Keywords: property taxation,welfare,tax incidence,local labor markets,rental housing
    JEL: H22 H41 H71 R13 R31 R38
    Date: 2021
  2. By: Knaisch, Jonas; Pöschel, Carla
    Abstract: In this paper we apply meta-regression analysis to quantitatively review the growing empirical tax incidence literature that indicates a substantial burden of the corporate income tax falling on employees. While most studies report large negative wage elasticities to corporate taxes, our findings suggest that estimates with positive values are published less often than they should. After accounting for publication bias, we estimate an average wage elasticity to corporate taxes of -0.016. Moreover, methodological aspects (data coverage and temporal focus) drive the heterogeneity among estimates. Our consensus estimates suggest a long-term wage elasticity to corporate taxes between -0.105 and -0.141, depending on the underlying CIT burden variable and the type of data used.
    Keywords: Tax incidence,wages,corporate income tax,wage elasticity to taxes,meta-regression analysis
    Date: 2021
  3. By: Felix Bierbrauer (University of Cologne); Aleh Tsyvinski (Yale University); Nicolas Werquin (Toulouse School of Economics)
    Abstract: We develop a model of political competition with endogenous turnout and endogenous platforms. Parties trade off incentivizing their supporters to vote and discouraging the supporters of the competing party from voting. We show that the latter objective is particularly pronounced for a party with an edge in the political race. Thus, an increase in political support for a party may lead to the adoption of policies favoring its opponents so as to asymmetrically demobilize them. We study the implications for the political economy of redistributive taxation. Equilibrium tax policy is typically aligned with the interest of voters who are demobilized.
    Keywords: Political competition, Income Taxation, Turnout
    JEL: D72 D82 H21
    Date: 2021–03
  4. By: Jaeger Nelson; Kerk Phillips
    Abstract: In this working paper, we analyze the long-term economic effects of financing a large and permanent increase in government expenditures of 5percent to10percent of gross domestic product (GDP) annually. This paper does not assess the economic effects of the increased government spending and focuses solely on the effects of their financing. The first part of the paper reviews the channels through which different financing mechanisms affect the economy. Specifically, the review focuses on how taxes on labor income, capital income, and consumption affect
    JEL: E62 H20 H31 H62
    Date: 2021–03–22
  5. By: Monica Bozzano (Università di Pavia); Paola Profeta (Università Bocconi, Axa Research Lab on Gender Equality, Dondena Centre for Research on Social Dynamics and Public Policies Università Bocconi); Riccardo Puglisi (Università di Pavia); Simona Scabrosetti (Università di Pavia, Dondena Centre for Research on Social Dynamics and Public Policies Università Bocconi)
    Abstract: Gender norms, i.e. the role of men and women in the society, are a fundamental channel through which culture may influence preferences for redistribution and public policies. We consider both cross-country and individual level evidence on this mechanism. We find that in countries that are historically more gender-equal the tax system today is more redistributive. At the individual level, we find that in more gender equal countries gender differences in redistributive preferences are significantly larger. This effect is driven by women becoming systematically more favorable to redistribution, while there are no significant changes for men. Interestingly, there is no gender-based difference in preferences for redistribution among left-leaning citizens, while this difference is significant among moderates in the expected direction: ideologically moderate women are more favorable to redistribution than moderate men, and this effect is even stronger among right-leaning individuals.
    Keywords: gender inequality, comparative public finance, tax mix, institutions, historical origins
    JEL: H10 H20 N30 Z18
    Date: 2021–03
  6. By: Isabel Martinez (ETH Zurich, Switzerland)
    Abstract: I analyze mobility responses to the unique introduction of regressive local income schedule in the Swiss Canton of Obwalden in 2006, which was aimed at attracting the top 1%. Difference-in-Differences estimations comparing Obwalden to all other cantons confirm that the reform successfully attracted rich taxpayers: by 2016, the share of rich in the canton more than doubled and average income per taxpayer was 16% higher relative to 2005. Using individual tax data and an instrumental variable approach, I find a large elasticity of the stock of rich taxpayers of 1.5–2 with respect to the average net-of-tax rate. The corresponding flow elasticity ranges from 6.5 to 10. However, the reform did not yield any Laffer effects. Finally, I find positive effects on local employment: the number of jobs per 1,000 inhabitants rose by an estimated 2.3% relative to other cantons and compared to 2005. However, these employment effects are likely driven by a simultaneous reduction of the corporate tax rate.
    Keywords: : Mobility; Personal income tax; Local taxes; Tax competition; Regressive income tax
    JEL: H24 H31 H71 H73 R23
    Date: 2021–01
  7. By: Nicolas Moreau (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion)
    Abstract: The present paper investigates the correlation between the French tax rebate triggered by the birth of a child and the probability to bring forward childbirth from late December to early January. Using administrative tax data from 2010 to 2016, we precisely simulate the corresponding tax rebate for households in which a child was born from mid-December to mid-January. Contrary to prior research, we did not find clear evidence of a significant link between the tax rebate brought about by a supplementary dependent child on the tax return and the probability of a December birth. Either the amount of the incentive may not be large enough or households may not correctly anticipate the corresponding tax rebate. Nevertheless, a small learning effect is present. According to our results, a significant correlation between the tax rebate and the probability of having a child in December is only observed among the wealthiest half of households that also benefit from a relatively large tax rebate. However, this seems to be due to a spurious correlation. Instead, our results reflect the willingness of parents to avoid childbirth on a public holiday.
    Keywords: fertility,income taxation,birth
    Date: 2021–03–03
  8. By: Giovanni D’Alessio (Banca d'Italia)
    Abstract: The paper shows the opinions on taxes of Italian citizens based on data gathered in four different national surveys between 1992 and 2013. Through a Principal Component Analysis, the study constructs a synthetic indicator of the propensity to evade, examining its intensity across various social groups and its evolution over time. The results show that the propensity to evade taxes is greater among households whose heads have low levels of education and income, are elderly and are resident in the South. Over time, the propensity to evade taxes has been growing on average, especially in the North, which has reduced the gap compared with the South, and among young people under 30 years old. The paper also shows a link between the propensity for tax evasion and some indicators of actual evasion, such as the use of cash and the under-reporting behaviour in the Survey of Household Income and Wealth (SHIW) conducted by the Bank of Italy, confirming the association between cultural elements and evasion behaviour.
    Keywords: tax evasion, social norms, social capital
    JEL: H26 A13 Z13
    Date: 2021–03

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