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on Public Finance |
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Issue of 2024‒04‒15
five papers chosen by |
| By: | Mr. Shafik Hebous; Andualem Mengistu |
| Abstract: | The international agreement on a corporate minimum tax is a milestone in global corporate tax arrangements. The minimum tax disturbs the equivalence between otherwise equivalent forms of efficient economic rent taxation: cash-flow tax and allowance for corporate equity. The marginal effective tax rate initially declines as the statutory tax rate rises, reaching zero where the minimum tax is inapplicable, and increases thereafter. This kink occurs at a lower statutory rate under cash-flow taxation. We relax the assumption of full loss offset; provide a routine for computing effective rates under different designs; and discuss policy implications of the minimum tax. |
| Keywords: | Investment; Minimum Taxation; Corporate Tax Reform; International Taxation; Rent Tax; ACE; Effective Tax Rate |
| Date: | 2024–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/057&r=pub |
| By: | Leonardo Barros Torres; Gilberto Tadeu Lima; Jaylson Jair da Silveira |
| Abstract: | We incorporate tax evasion to a demand-led macrodynamic model of capacity utilization and output growth rate. The frequency of tax evaders is endogenously time-varying, driven by imitation-augmented satisficing evolutionary dynamics involving pecuniary and non-pecuniary factors reflecting the distribution of tax morale across taxpayers. Consequently, the microdiversity of tax compliance behavior and the macrodynamics of economic activity are co-evolutionarily coupled. Matching empirical evidence, long-run heterogeneity in tax compliance is a stable evolutionary equilibrium, and the higher the median tax morale, the lower the frequency of tax evaders. Other comparative statics matching empirical evidence are obtained analytically and through numerical simulations. |
| Keywords: | Tax compliance behavior; tax morale; satisficing evolutionary dynamics; capacity utilization; output growth rate |
| JEL: | B52 C52 D33 E12 E70 H26 |
| Date: | 2024–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2024wpecon10&r=pub |
| By: | Joshi, Anuradha; Kangave, Jalia; van den Boogaard, Vanessa |
| Abstract: | Increased attention has been paid to the gender dimensions of taxation in recent years, though there has been limited research on the subject – particularly in lower-income contexts. Understanding how tax policies might affect women in lower-income countries is important at the current time, when governments are looking for new ways to increase domestic revenue – particularly through expanding the tax base. Given that women have historically represented only a small part of the formal workforce in these contexts, a shift towards indirect taxes and taxing the informal economy are likely to have a disproportionate effect on poorer households, and women in particular. Understanding whether, and in what specific ways, tax policy in lower-income countries affects the ability of women to participate in the workforce and carry out their caring responsibilities within households is critical for ensuring development with gender justice. This paper reviews the existing literature and related debates on gender and tax in lower income countries. It identifies knowledge gaps, and maps broader issues that are relevant for understanding the gendered impact of taxation. The paper makes four broad observations. First, existing research focuses on formal direct taxes that are less relevant for women in lower-income contexts, given their high participation rates in the informal economy. Instead, presumptive taxes, user fees and informal taxes place a disproportionate burden on low income women. Second, there needs to be greater attention paid to the ways in which women in senior and junior positions in tax administration can affect how taxpayers interact with tax authorities. Third, any assessment of tax policy’s impact on gender needs to consider revenue and expenditure together to ensure that the positive effects of tax policies are not undermined by budgets, or vice versa. Finally, we show that there has been insufficient gender-disaggregated data collection and analysis, which is required to draw generalizable conclusions about the gendered impact of tax policy. We argue that tax specialists need to think about research questions that address these gaps, and simultaneously address methodological challenges by gender disaggregation in data collection, as well as impact evaluation of tax policy implementation and innovation. Our overall conclusions are that tax policies can be made gender-neutral by paying careful attention to where they affect women differentially. There are opportunities for governments to explore policies that positively discriminate as a way to address structural gendered inequities. At the same time we recognise that, barring a few exceptions, tax policy and administration is often an unwieldy instrument to address gender equity directly. Instead other policies relating to labour markets, social protection and public services are better placed to be gender-transformative. |
| Keywords: | Finance, |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:18276&r=pub |
| By: | Youssef Benzarti; Santiago Garriga; Darío Tortarolo |
| Abstract: | This paper estimates the effect of a temporary and large (21 p.p.) value-added tax (VAT) cut along with anti-profiteering measures on food necessities during a period of high inflation in Argentina. Using barcode-level data across more than 3, 000 supermarkets, we find that (1) absent the anti-profiteering measures, the pass-through of the temporary VAT cut to prices was asymmetric: prices responded less to the VAT cut than its repeal resulting in prices that were higher than their pre-VAT cut levels; (2) imposing anti-profiteering measures, such as setting a ceiling on price increases, led to symmetric pass-through rates. Using a household welfare model, we show that the VAT cut resulted in progressive welfare effects and that the anti-profiteering measures were successful at dampening the regressive welfare effects of the asymmetric pass-through. However, we show that these policies benefited high-income households more because pass-through rates are more asymmetric in independent grocery stores, which is precisely where low-income households tend to shop the most. |
| JEL: | H0 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32241&r=pub |
| By: | Deng, Guoying; Du, Pengcheng; Hernandez, Manuel A.; Xu, Shu |
| Abstract: | This paper examines the association between corporate income taxes and labor market informality. We present a theoretical framework showing that a higher tax enforcement can push firms to pass on the burden to workers by reducing their social security compliance as well as downsizing and lowering wages. The model propositions are tested using a regression discontinuity design that exploits a national corporate tax reform in China. We find that for every one percentage point increase in the effective tax rate, firms reduce their probability of making basic social security contributions by 0.8%, their compliance rate by 1.4 percentage points, and the probability of making supplementary contributions by 0.6%, while the number of workers and wages fall by 4.4% and 0.7%, respectively. We observe that the effects are more salient among firms privately owned and controlled, large businesses, and in locations where social security contributions are directly collected by the social security administration. The findings suggest that workers not only bear part of the higher corporate taxes faced by firms, but an increase in firms’ tax burden contributes to social security evasion and informality in labor markets. |
| Keywords: | taxes; labour market; social security; remuneration; China; Asia; Eastern Asia |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2244&r=pub |