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on Public Finance |
| By: | Thor O. Thoresen; Marius A. K. Ring; Odd E. Nygård; Jon Epland (Statistics Norway) |
| Abstract: | Over the past decade, the question of whether and how to tax household wealth has risen to the forefront of policy debates across the world. Norway belongs to only a handful of countries that (still) levy an annual net wealth tax. We exploit rich Norwegian administrative data to perform descriptive analyses that address questions at the focal point of the wealth tax debate. We discuss how the taxation of wealth fits in with the personal income tax. We further investigate the redistributional effects of wealth taxation and explore the extent to which wealth taxation may cause adverse liquidity effects for private firms. Finally, we consider the effects of wealth taxation on charitable giving. Taken together, we see the evidence presented here as not weakening the case for upholding the tax: we find favorable distributional effects and the efficiency losses appear to be limited. |
| Keywords: | Wealth tax; administrative data; distributional effects; efficiency loss |
| JEL: | H21 H23 H25 H31 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:960&r= |
| By: | Kohl, Miriam; Richter, Philipp M. |
| Abstract: | This paper examines the effects of a unilateral reform of the redistribution policy in an economy open to international trade. We set up a general equilibrium trade model with heterogeneous agents allowing for country asymmetries. We show that under international trade compared to autarky, a unilateral tax increase leads to a less pronounced decline in aggregate real income in the reforming country, while income inequality is reduced to a larger extent for sufficiently small initial tax rates. We highlight as a key mechanism a tax-induced reduction in the market size of the reforming country relative to its trading partner, resulting in a firm selection effect towards exporting. From the perspective of a non-reforming trading partner, the unilateral redistribution policy reform resembles a unilateral increase in trade costs leading to a deterioration of terms-of-trade and a decline in both aggregate real income and inequality. |
| Keywords: | Income inequality,Redistribution,International trade,Heterogeneous firms |
| JEL: | D31 F12 F16 H24 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tudcep:0521&r= |
| By: | Torrregrosa Hetland, Sara (Department of Economic History, Lund University); Sabaté, Oriol (Department of Economic History, University of Barcelona) |
| Abstract: | This paper studies the developments in the income taxes of Sweden, the United Kingdom, and the United States during the first half of the twentieth century. We present the evolution of marginal and average effective tax rates, number of taxpayers, and income tax due over the whole income distribution, and calculate the corresponding indices of progressivity and redistribution. Our results show that redistribution through the income tax increased during the period, but with varying intensity and mechanisms. During World War I this was a joint effect of increases in the amount of revenue collected (average effective tax rate) and progressivity, whereas during World War II revenue increased again but progressivity diminished, as the tax incorporated more low- and middle-income taxpayers. The income tax in the United Kingdom was always the most redistributive of the three, and after 1945 also the one that remained most progressive. |
| Keywords: | taxation; redistribution; progressivity; income tax; world wars |
| JEL: | H23 H24 N42 N44 |
| Date: | 2021–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:luekhi:0224&r= |
| By: | Lorenz, Johannes; Diller, Markus; Sureth, Caren |
| Abstract: | This study investigates the contagious nature of tax avoidance by examining how narratives affect tax avoiding behavior. We adapt the idea of narrative economics indicating that individuals' actions are stimulated by stories that spread within a society. We employ two types of infection models to theoretically investigate how tax avoidance schemes spread over time and vanish eventually consistent with patterns known from epidemiology. We find that general tax avoidance can persist even if its expected outcome is negative, while specific tax avoidance schemes might vanish even though their expected outcome is positive. We find empirical support for the predicted dissemination of narratives related to both general and specific tax avoidance schemes in google n-grams. Finally, we show that dissemination of specific tax avoidance schemes is attenuated by anti-narratives in (social) media. Our findings help to understand how tax avoidance spreads, under what conditions anti-avoidance measures can effectively curb tax avoidance and point towards the crucial role of transparency of enhanced enforcement by visible narratives. |
| Keywords: | tax avoidance,tax evasion,epidemiology,contagion,SIS-model,SIR-model,n-grams |
| JEL: | H26 C73 K34 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:268&r= |
| By: | Giulia Aliprandi (EU Tax - EU Tax Observatory, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Mona Baraké (EU Tax - EU Tax Observatory); Paul-Emmanuel Chouc (EU Tax - EU Tax Observatory) |
| Abstract: | This study documents the activity of European banks in tax havens and how this activity has evolved since 2014. The analysis covers 36 systemic European banks that have been required to publicly report country-by-country data on their activities since 2015. We study the level and evolution of the profits booked by these banks in tax havens over the 2014-2020 period. We also compute their effective tax rates and their tax deficit—defined as the difference between what these banks currently pay in taxes and what they would pay if they were subject to a minimum effective tax rate in each country. We start by creating a list of tax haven jurisdictions used by the banking sector. We combine two indicators to identify tax havens: the effective tax rate on bank profit and the amount of bank profit per employee. Overall, 17 jurisdictions feature in our list: Bahamas, Bermuda, the British Virgin Islands, Cayman Islands, Guernsey, Gibraltar, Hong Kong, Ireland, Isle of Man, Jersey, Kuwait, Luxembourg, Macao, Malta, Mauritius, Panama, and Qatar. Using this list, we show that European banks use tax havens significantly, with no trend during the 2014–2020 period. The main European banks book EUR 20 billion (or 14% of their total profits) in tax havens each year. This percentage has been stable since 2014 despite the introduction of mandatory information disclosure. Bank profitability in tax havens is abnormally high: EUR 238 000 per employee, as opposed to around EUR 65 000 in non-haven countries. This suggests that the profits booked in tax havens are primarily shifted out of other countries where service production occurs. Around 25% of the profits made by the European banks in our sample are booked in countries with an effective tax rate lower than 15%. The use of tax havens varies considerably from bank to bank. The mean percentage of profits booked in tax havens is about 20% and ranges from 0% for nine banks to a maximum of 58%. The mean effective tax rate paid by the banks in our sample is 20%, with a minimum of 10% and a maximum of 30%. Seven banks exhibit a particularly low effective tax rate, below or equal to 15%. To better understand this heterogeneity, we analyse the use of tax havens by three banks with a relatively high presence in tax havens: HSBC, Deutsche Bank, and Société Générale. We observe a diversity of situations: for HSBC, the bulk of haven profits come from just one haven (Hong Kong), while in other cases multiple tax havens are involved. We estimate the amount of revenues that could be collected by applying a minimum tax rate on the profits of banks. We simulate a tax similar to the G20/OECD minimum tax proposal ,which the majority of the Inclusive Framework jurisdictions supported in July 2021. In this proposal each parent country would collect the tax deficit of its own banks. For instance, if the internationally agreed minimum tax rate is 15% and a German multinational bank has an effective tax rate of 10% on the profits it books in Singapore, Germany would impose an additional tax of 5% on these profits to arrive at an effective rate of 15%. We consider three minimum tax rates—15%, 21%, and 25%—and in each case compute the extra tax owed per bank and tabulate results by headquarter country. Our findings show that a minimum tax has significant revenue potential. With a 25% minimum tax rate, our sample of European banks would have to pay EUR 10-13 billion in additional taxes annually. Lower tax rates reduce the gains to EUR 6-9 billion for the 21% tax rate and EUR 3-5 billion for the 15% tax rate. Banks with low effective tax rates—which tend to make use of tax havens to shift profits and lower their tax liability—would be particularly affected. Our findings illustrate the usefulness of country-by-country reporting, a vital piece of information to track profit shifting and corporate tax avoidance. They also suggest that despite the growing salience of these issues in the public debate and in the policy world, European banks have not significantly curtailed their use of tax havens since 2014. More ambitious initiatives—such as a global minimum tax with a 25% rate—may be necessary to curb the use of tax havens by the banking sector. |
| Date: | 2021–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-03350725&r= |
| By: | Herault, Nicolas; Hyslop, Dean; Jenkins, Stephen P.; Wilkins, Roger |
| Abstract: | We use a new Australian longitudinal income tax dataset, Alife, covering 1991–2017, to examine levels and trends in the persistence in top-income group membership, focussing on the top 1%. We summarize persistence in multiple ways, documenting levels and trends in rates of remaining in top-income groups; re-entry to the top; the income changes associated with top-income transitions; and we also compare top-income persistence rates for annual and ‘permanent’ incomes. Regardless of the perspective taken, top-income persistence increased markedly over the period, with most of the increase occurring in the mid-2000s and early 2010s. In the mid- to late-2010s, Australian top-income persistence rates appear to have been near the top of the range of tax-data estimates for other countries. Using univariate breakdowns and multivariate regression, we show that the rise in top-income persistence in Australia was experienced by many population subgroups. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2021–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:az7tf&r= |