|
on Public Finance |
|
Issue of 2022‒07‒25
fifteen papers chosen by |
| By: | Sebastian Link; Manuel Menkhoff; Andreas Peichl; Paul Schüle; Lukas Menkhoff |
| Abstract: | This paper estimates the causal effect of corporate tax hikes on firm investment based on more than 1,400 local tax changes. By observing planned and realized investment volumes in a representative sample of German manufacturing firms, we can study how tax hikes induce firms to revise their investment decisions. On average, the share of firms that invest less than previously planned increases by three percentage points after a tax hike. This effect is twice as large during recessions. |
| Keywords: | investment, corporate taxation, state dependence, business cycle |
| JEL: | G11 H25 H32 H71 O16 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9786&r= |
| By: | Elias Ilin; Laurence J. Kotlikoff; Melinda Pitts |
| Abstract: | We develop, apply, and test a new measure of the marriage tax – the reduction in future spending from getting married – using SCF and ACS data. Our measure incorporates all major and most minor U.S. tax and benefit programs. And it assumes clone marriage – marrying oneself – to ensure the living-standard loss from marrying is unaffected by spousal choice. Our calculated high and highly variable marriage taxes materially reduce the probability of marriage particularly for low-income females with children. |
| JEL: | H2 H31 J12 J18 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30159&r= |
| By: | Kaisa ⓡ, Nurminen, Tuomas ⓡ, Miettinen, Topi ⓡ, Metsälampi, Satu ⓡ Kotakorpi; Kaisa Kotakorpi |
| Abstract: | We investigate effects of tax reporting institutions on evasion and incidence using an experimental double auction market setting. We find that 28% of the sellers are truthful when only sellers report, but that 88% and 64% of them are truthful under costless and costly third-party reporting by buyers, respectively. Reporting behavior therefore responds to the intensity of deterrence. However, we find that prices do not fully reflect the lower taxes of the evaders. Thus, when only sellers report, tax incidence deviates from the prediction of the standard model, and there is deadweight loss even if tax revenue is low. Pricing, incidence, and reporting patterns in all treatments can be explained by a model of lying costs with image concerns that give rise to a motivation to appear honest. |
| Keywords: | tax evasion, tax incidence, third-party reporting, double auction, social image, experiment |
| JEL: | H21 H22 H26 D40 D44 D91 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9791&r= |
| By: | Agrawal, David R.; Stark, Kirk J. |
| Abstract: | The remote work revolution raises the possibility that a much larger segment of the population will be able to sever the geographic linkage between home and work. This new development implicates several foundational questions in the law and economics of U.S. fiscal federalism. What are the taxing rights of states as to nonresident remote workers employed by firms within the state? May a state impose income taxes on nonresident employees only to the extent they are physically working within the state? Does state taxing power extend to all income derived from in-state firms, including wages paid to those who never set foot in the state? How these legal questions are resolved has important implications for the future of state income taxes. Standard sourcing rules attribute wage income to the employee's physical location. In the presence of remote work, however, rigid ad-herence to this physical presence rule could intensify the progressivity-limiting dynamics of federalism by re-ducing the costs to households of exploiting labor income tax differentials across jurisdictions. In this article, we document the rise of remote work, the status of state-level income tax progressivity as well as its evolution over time, and the correlation between work from home trends and progressivity. We consider how alternative legal rules for the sourcing of income can affect telework-induced mobility, but conclude that, regardless of which sourcing regime prevails in coming legal battles, the rise of remote work is likely to limit redistribution via state income taxes. While some sourcing rules may better preserve progressivity in the short term than others, the more fundamental threat to progressive state tax regimes derives from remote work's long-term erosion of the benefits of urban spatial clustering. To the extent that the nation's productive cities lose their allure as centers of agglomeration and the wages of high-skilled workers in these cities fall, the ability of their host states to pursue redistributive tax policies will likely be constrained. Significantly, these deglomeration effects will arise regard-less of how state taxing rights are adapted for the remote work era, and therefore may carry with them implica-tions for income tax progressivity at the federal level as well. |
| Keywords: | income tax,remote work,sourcing rules,progressivity |
| JEL: | H2 H7 J6 K3 R5 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1119&r= |
| By: | Mr. Alexander D Klemm; Ms. Thornton Matheson; Laura Power; Thomas Brosy |
| Abstract: | The 2017 Tax Cuts and Jobs Act (TCJA) sharply reduced effective corporate income tax rates on equity-financed US investment. This paper examines the reform’s impact on US inbound foreign direct investment (FDI) and investment in property, plant and equipment (PPE) by foreign-owned US companies. We first model effective marginal and average tax rates (EMTRs and EATRs) by country, industry, and method of finance, and then use those tax rates to calculate the tax semi-elasticities of inbound FDI and PPE investment. We find that both PPE investment and FDI financed with retained earnings responded positively to the TCJA reform, but FDI financed with new equity or debt did not. In country-level PPE regressions, inclusion of macroeconomic controls renders tax rate coefficients insignificant, suggesting that the increase in PPE investment after TCJA was driven by general economic growth. In regressions of FDI financed with retained earnings, however, tax coefficients were robust to inclusion of macroeconomic controls. As the literature predicts, EATRs have a greater impact on cross-border investment than EMTRs. Country-by-industry regressions showed a larger effect of taxes on PPE investment than aggregate country-level regressions, but industry-level tax rates appear to have no effect on earnings retention. |
| Keywords: | TCJA; Inbound Investment; Effective Tax Rates; PPE investment; investment in property, plant and equipment; PPE Investment; inbound foreign direct investment; tax coefficient; Effective tax rate; Foreign direct investment; Marginal effective tax rate; Average effective tax rate; Corporate income tax; Global |
| Date: | 2022–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2022/079&r= |
| By: | Jeffrey Clemens; Philip G. Hoxie; Stan Veuger |
| Abstract: | We use an instrumental-variables estimator reliant on variation in congressional representation to analyze the effects of federal aid to state and local governments across all four major pieces of COVID-19 response legislation. Through September 2021, we estimate that the federal government allocated $855,000 for each state or local government job-year preserved. Our baseline confidence interval allows us to rule out estimates of less than $433,000. Our estimates of effects on aggregate income and output are centered on zero and imply modest if any spillover effects onto the broader economy. We discuss aspects of the pandemic context, which include the surprising resilience of state and local tax revenues as well as of broader macroeconomic conditions, that may underlie the small employment and stimulative impacts we estimate in comparison with previous research. |
| JEL: | E6 H1 H7 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30168&r= |
| By: | Sylvain Chassang (Princeton University); Lucia Del Carpio (INSEAD); Samuel Kapon (Princeton University) |
| Abstract: | We consider a government collecting taxes from a large number of tax-payers using limited enforcement capacity. Under random enforcement, limited capacity results in multiple equilibria: if most agents comply, limited enforcement is sufficient to dissuade individual misbehavior; if most agents do not comply, enforcement capacity is overstretched and fails to dissuade misbehavior. In settings without behavioral frictions, prioritized enforcement strategies can implement high collection as the unique rationalizable outcome. Motivated by a field implementation opportunity, we investigate both theoretically and experimentally the extent to which this insight extends to environments with incomplete information and bounded rationality. |
| Keywords: | tax collection, government capacity, divide and conquer |
| JEL: | H20 H29 |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:299&r= |
| By: | yann Le Bodo (EHESP - École des Hautes Études en Santé Publique [EHESP], ARENES - Centre de Recherches sur l'Action Politique en Europe - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - Institut d'Études Politiques [IEP] - Rennes - EHESP - École des Hautes Études en Santé Publique [EHESP] - CNRS - Centre National de la Recherche Scientifique); Fabrice Etilé (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - 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, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - 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); Chantal Julia (CRESS (U1153 / UMR_A_1125 / UMR_S_1153) - Centre de Recherche Épidémiologie et Statistique Sorbonne Paris Cité - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - USPC - Université Sorbonne Paris Cité - INSERM - Institut National de la Santé et de la Recherche Médicale - UPC - Université Paris Cité - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Université Sorbonne Paris Nord, CRESS - U1153 - Equipe 3: EREN- Equipe de Recherche en Epidémiologie Nutritionnelle - Université Sorbonne Paris Nord - CRESS (U1153 / UMR_A_1125 / UMR_S_1153) - Centre de Recherche Épidémiologie et Statistique Sorbonne Paris Cité - CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - USPC - Université Sorbonne Paris Cité - INSERM - Institut National de la Santé et de la Recherche Médicale - UPC - Université Paris Cité - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Marine Friant-Perrot (DCS - Droit et changement social - CNRS - Centre National de la Recherche Scientifique - Nantes Univ - UFR DSP - Nantes Université - UFR Droit et Sciences Politiques - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université); Eric Breton (ARENES - Centre de Recherches sur l'Action Politique en Europe - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - Institut d'Études Politiques [IEP] - Rennes - EHESP - École des Hautes Études en Santé Publique [EHESP] - CNRS - Centre National de la Recherche Scientifique, EHESP - École des Hautes Études en Santé Publique [EHESP], SHS - Département des sciences humaines et sociales - EHESP - École des Hautes Études en Santé Publique [EHESP]); Sébastien Lecocq (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Christine Boizot-Szantai (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Céline Bergeran (EHESP - École des Hautes Études en Santé Publique [EHESP]); Françoise Jabot (ARENES - Centre de Recherches sur l'Action Politique en Europe - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - Institut d'Études Politiques [IEP] - Rennes - EHESP - École des Hautes Études en Santé Publique [EHESP] - CNRS - Centre National de la Recherche Scientifique, EHESP - École des Hautes Études en Santé Publique [EHESP], SHS - Département des sciences humaines et sociales - EHESP - École des Hautes Études en Santé Publique [EHESP]) |
| Abstract: | In 2016, the World Health Organization officially recommended sugar-sweetened beverage (SSB) taxation as a strategy to reduce purchases, stimulate product reformulation and generate revenues for health-related programmes. Four years before, France had been one of the first countries to tax SSBs. However, the design of this tax was not considered optimal: its rate was flat, low, identical for SSBs and artificially-sweetened drinks containing no added sugars, and its initial public health justification was set aside in favour of budgetary concerns. In 2018, a new taxation scheme was enacted. Integrated in the Social Security Finance Bill, the tax on SSBs is now linearly indexed to the quantity of added sugars in the drink. In this article, we summarize the lessons learnt from the 2012 soda tax and offer insights on the potential public health benefits of the new tax enacted in 2018. A multidimensional framework aimed at gathering evidence about SSB taxation for public health drove our rational so that we address: (1) the soda tax policy-change process; (2) its impact on price and purchases; (3) the consumer receptiveness to the tax and; (4) its legal framework. We also discuss the potential application of the tax to other foods/nutrients. |
| Keywords: | Sugar-sweetened beverages,Nutrition,Tax,Policy,Public health,Prevention |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:pseptp:halshs-03673111&r= |
| By: | Melinda Fremerey; Andreas Lichter; Max Löffler |
| Abstract: | We study the consequences of a large-scale austerity program targeting financially-constrained municipalities in Germany. For identification, we exploit the quasi-random assignment of treatment among equally-distressed municipalities using a difference-in-differences design. The policy helped targeted municipalities to consolidate budgets. Whereas the amount of fiscal consolidation was homogeneous among treated municipalities, strategies of consolidation differed between smaller and larger municipalities. The former primarily cut spending on local public services, whereas the latter predominantly relied on tax increases. We detect no adverse economic effects but sizable negative effects on population levels and house prices in municipalities reducing local amenities. |
| Keywords: | austerity, fiscal consolidation, local amenities, taxes, spatial equilibrium |
| JEL: | H74 H73 H11 H30 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9800&r= |
| By: | Carlo V. Fiorio (University of Milan, Irvapp-FBK and Dondena Centre); Tommaso Frattini (University of Milan, Centro Studi Luca D'Agliano, CEPR, CReAM and IZA); Andrea Riganti (University of Milan); Michael Christl (European Commission - JRC) |
| Abstract: | We provide novel and comprehensive evidence on the net fiscal contributions of natives and migrants to the governmental budgets of EU countries. We account for income taxes and cash benefits, along with indirect taxes and in-kind benefits, which are often missing in standard datasets. We find that on average, migrants were net contributors to public finances over the period of 2014-2018 in the EU and, moreover, that they contribute approximately EUR 1.5 thousand more per capita each year than natives. We also show that this difference is partly due to selection on characteristics that make migrants net fiscal contributors, such as demographic factors and employment probability. |
| Keywords: | Migration; EU; individual taxation; public benefits; individual fiscal contribution |
| JEL: | F22 H24 H50 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:taxref:202205&r= |
| By: | Cristian Alonso; Mr. Joey Kilpatrick |
| Abstract: | While a carbon tax is widely acknowledged as an efficient policy to mitigate climate change, adoption has lagged. Part of the challenge resides in the distributional implications of a carbon tax and a belief that it tends to be regressive. Even when not regressive, poor households could be hurt by a carbon tax, particularly in countries that rely heavily on carbon-intensive energy sources. Using household surveys, we study how a carbon tax may affect households in the Asia Pacific region, the main source of CO2 emissions. We document a wide range of country-specific policies that could be implemented to compensate households, reduce inequality, and build support for adoption. |
| Keywords: | Carbon pricing; Climate change; Compensation; Distributional effects; Inequality |
| Date: | 2022–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2022/116&r= |
| By: | Enea Baselgia; Isabel Z. Martínez |
| Abstract: | We collect, digitize, and supplement the Swiss rich list for the years 1989–2020 published in the “BILANZ” business magazine to gain new insights on the structure and dynamics of top wealth in Switzerland. Using this data allows us study the super-rich in Switzerland in ways that were not possible in previous research based largely on tax data. In addition to presenting this valuable data source, and also discussing its limitations, we make three distinctive contributions to the literature. First, we present a number of new facts on the wealth elite in Switzerland. We show that about 60% of the super-rich are heirs—a much larger fraction than in the United States where many of the super-rich are self-made—and that five in ten super-rich residing in Switzerland are foreign-born. Second, we estimate the sensitivity of the location-decision of super-rich foreigners to a preferential tax scheme that offers wealthy foreigners to be taxed on their expenses rather than on their true income and wealth. We are the first to evaluate this policy—similar to “non-dom” taxation that exists in other countries like the UK or Italy—and show that when some of the Swiss cantons abolished this practice, they lost about 30% of their stock of super-rich taxpayers. Third, we use the wealth series compiled in our BILANZ dataset to estimate the wealth shares of the top 0.01% in Switzerland and show how they compare to earlier estimates by Föllmi and Martínez (2017) based on wealth tax data. We find that top wealth concentration is higher than previously assumed, an conclude that top wealth shares based on tax data constitute a lower bound, while the estimates based on our BILANZ data are upper bounds. |
| Keywords: | super-rich, wealth inequality, wealth distribution, wealth mobility, top wealth shares |
| JEL: | D31 H24 C81 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9778&r= |
| By: | Mukherjee, Sacchidananda (National Institute of Public Finance and Policy) |
| Abstract: | Indian GST completes five years on 30 June 2022. Revenue assessment is important to assess the success of GST in protecting revenues of the Union as well as state governments. By compiling comparable revenue streams for pre- and post-GST regime, we compare the revenue performance of GST for the period 2005-06 to 2021-22RE. Our analysis shows that both the Union and state governments could not reap the benefits of GST in terms of higher revenue mobilization yet. By increasing revenue mobilization from "Non-Shareable Duties" and "Cesses on Commodities" under Union Excise Duties, the Union government could manage the revenue shortfall in GST. The GST compensation (both from the GST compensation fund as well as back-to-back loans from the Centre) helped states to sustain the revenue stream as prevalent prior to introduction of GST. In the post GST compensation regime, some states may face revenue stress. States where dependence on GST compensation (as measured by the share of GST compensation in SGST) as well as the share of SGST in own tax revenue are higher (e.g., Goa, Punjab and Chhattisgarh), they may face relatively higher revenue stress than other states. |
| Keywords: | Revenue assessment ; Goods and Services Tax (GST) ; Revenue protection ; GST Compensation ; India |
| JEL: | H20 E62 H26 |
| Date: | 2022–07 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:22/385&r= |
| By: | Christopher Hoy; Laban Simbeye; Muhammad Abdullah Ali Malik; Aliisa Koivisto; Mashekwa Maboshe |
| Abstract: | This paper examines how formal firms have been impacted by and recovered from the pandemic by drawing on two distinct but complementary data sources. This is the first attempt to use both survey and tax administrative data to measure the initial decline and subsequent recovery of firm sales and employment in a low- or lower-middle-income country. |
| Keywords: | Firms, COVID-19, Tax administration data, Zambia, economic recovery, Tax data, Administrative data |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2022-73&r= |
| By: | Naphtal Hakizimana; John Karangwa; Jesse Lastunen; Aimable Mshabimana; Innocente Murasi; Lucie Niyigena; Michael Noble; Gemma Wright |
| Abstract: | This paper assesses the feasibility of developing a tax and benefit microsimulation model in Rwanda. Tax-benefit microsimulation can be used to explore ways in which national development goals can be achieved in a cost-effective manner, and to assess the distributional effects of more comprehensive social security arrangements. |
| Keywords: | Tax-benefit microsimulation, Revenue, Microsimulation, Tax-benefit policy, Tax benefits |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2022-72&r= |