nep-pub New Economics Papers
on Public Finance
Issue of 2022‒10‒03
four papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. An Analysis of the President’s 2023 Budget By Congressional Budget Office
  2. Markups, Taxes, and Rising Inequality By Stéphane Auray; Aurélien Eyquem; Bertrand Garbinti; Jonathan Goupille-Lebret
  3. Tourist choice, competitive tourism markets and the effect of a tourist tax on producers revenues By Asensi Descals-Tormo; Jose Ramon Ruiz-Tamarit
  4. Optimal Assignment of Bureaucrats: Evidence from Randomly Assigned Tax Collectors in the DRC By Augustin Bergeron; Pedro Bessone; John Kabeya Kabeya; Gabriel Z. Tourek; Jonathan L. Weigel

  1. By: Congressional Budget Office
    Abstract: On March 28, 2022, the Administration submitted its annual set of budgetary proposals to the Congress. In this report, the Congressional Budget Office examines how those proposals, if enacted, would affect budgetary outcomes in relation to CBO’s most recent baseline budget projections. Under the President’s proposals, the cumulative deficit for the 2023-2032 period would be $2.6 trillion smaller than it is in CBO’s baseline projections because revenues would be higher and spending lower.
    JEL: H20 H30 H50 H51 H55 H60 H61 H62 H63 H68
    Date: 2022–09–13
  2. By: Stéphane Auray (CREST-ENSAI, Bruz, France); Aurélien Eyquem (University of Lausanne, Switzerland); Bertrand Garbinti (CREST-ENSAE-Institut Polytechnique Paris, France); Jonathan Goupille-Lebret (Univ Lyon, CNRS Ecully and ENS de Lyon, France)
    Abstract: How to explain rising income and wealth inequality? We build an original heterogeneousagent model with three key features: (i) an explicit link between firm’s market power and top income shares, (ii) a granular representation of the tax and transfer system, and (iii) three assets with endogenous portfolio decisions. Using France as an illustration, we look at how changes in markups, taxes, factor productivity, and asset prices affect inequality dynamics over the 1984-2018 period. Rising markups account for the bulk of rising income inequality. Wealth inequality dynamics result mostly from changes in saving rate inequality but only in response to the exogenous changes in taxation and markups. Our results point to the critical importance of endogenous saving decisions in response to exogenous shocks as a key driver of wealth inequality.
    Keywords: Heterogeneous Agents, Taxes, Market Power, Income Inequality, Wealth Inequality.
    JEL: D4 E2 H2 O4 O52
    Date: 2022–09–19
  3. By: Asensi Descals-Tormo (Department of Applied Economics, Universitat de València (Spain)); Jose Ramon Ruiz-Tamarit (Department of Economic Analysis, Universitat de València (Spain) & IRES/LIDAM, UCLouvain)
    Abstract: We propose a model for the tourism sector assuming basically two markets, one for tourist services and the other for accommodation. These sub-markets are considered as separate but interrelated. The nature of the feedback is determined by a vertical complementarity between tourist services and lodging. We obtain the optimal solution of the tourist choice problem, the primary demand for tourist services and the derived demand for overnight stays. Then, we focus on the equilibrium outcomes assuming perfectly competitive tourism markets. We don’t address the externalities caused by tourism activities. Consequently, we move away from efficiency by introducing a tax on overnight stays and inspecting the consequences for the competitiveness and for producers’ revenues in each market. The answer key elements are, apart from reservation prices, the direct and cross price elasticities of demand for tourist services. The study of structural parameters extends and completes our analysis of tourism.
    Keywords: Complementarity, Elasticity, Preferences, Tax, Tourism
    JEL: D11 H2 Z3
    Date: 2022–07–27
  4. By: Augustin Bergeron; Pedro Bessone; John Kabeya Kabeya; Gabriel Z. Tourek; Jonathan L. Weigel
    Abstract: The assignment of workers to tasks and teams is a key margin of firm productivity and a potential source of state effectiveness. This paper investigates whether a low-capacity state can increase its tax revenue by optimally assigning its tax collectors. We study the two-stage random assignment of property tax collectors into teams and to neighborhoods in a large Congolese city. The optimal assignment involves positive assortative matching on both dimensions: high (low) ability collectors should be paired together, and high (low) ability teams should be paired with high (low) payment propensity households. Positive assortative matching stems from complementarities in collector-to-collector and collector-to-household match types. We provide evidence that these complementarities reflect in part high-ability collectors exerting greater effort when matched with other high-ability collectors. According to our estimates, implementing the optimal assignment would increase tax compliance by 2.94 percentage points and revenue by 26% relative to the status quo (random) assignment. Alternative policies, such as replacing low-ability collectors with new ones of average ability or increasing collectors’ performance wages, are likely incapable of achieving a similar revenue increase.
    JEL: D73 H11 H20 M50
    Date: 2022–09

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