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on Public Finance |
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Issue of 2024‒05‒27
eight papers chosen by |
| By: | Sophie Cottet |
| Abstract: | This paper uses administrative employer-employee data to uncover the effects of a large payroll tax reduction for minimum-wage workers in France. Exploiting the change in labor costs both at the job level and at the firm level, I find that the policy spurred an additional 13 percentage points increase in the number of minimum-wage jobs, and that these extra jobs stem exclusively from firms which had previously very few or no minimum-wage workers. On the other hand, firms which already employed workers at minimum-wage levels, and therefore benefit ex ante from a cash windfall, increase employment irrespective of wage levels. These firms grow by an additional 4 percent in the first two years following the reform. This effect is stronger in liquidity-constrained and credit-constrained firms. Overall, these results show that not all firms react to changes in relative labor costs and highlight the importance of alleviating liquidity constraints for firm growth. |
| Keywords: | payroll taxes, firm behaviour, rent sharing, minimum wage |
| JEL: | H22 H25 H32 J21 J23 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11076&r=pub |
| By: | Nora Strecker; Georg U. Thunecke; Benedikt Zoller-Rydzek |
| Abstract: | Rising globalization has exerted a downward pressure on global tariffs, thereby eroding tariff revenues in developing nations. We analyse how gains from lowering import tariffs are distributed within the firm and the corresponding tax (base) implications. First, we study the effect of tariff changes on imports. Second, we estimate the firm-level semi-elasticities of profits, sales, capital, and wages with respect to import tariffs. |
| Keywords: | Globalization, Taxation, Tariffs, Inequality, Tax revenue |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-23&r=pub |
| By: | Bañez, Emerson S. |
| Abstract: | The study aims to evaluate the country’s legal framework for taxing digital transactions, specifically the extent to which provisions of the law can map onto the value of digital markets. Based on findings on the structure of the digital commerce value chain and its possible interactions with both current and proposed tax regimes, the study provides four policy prescriptions: (a) optimize existing tax authority over platforms, (b) have a digital-ready tax administration, (c) expand the scope for investigation and liability, and (d) engage at the international level. Nonresident providers are the ones that have gained the most from digital markets while minimizing the tax impact of their activities. The Philippines should continue to explore multilateral options for the reallocation of taxing rights as well as address the issue of “base erosion and profit shifting”. Such options include regional tax treaties and the Organisation for Economic Co-operation and Development’s framework treaty. Efforts at negotiating and crafting the provisions should take into account the Philippines’ trading power relative to other countries, and its comparative ability to exercise jurisdiction. |
| Keywords: | digital taxation;taxes;digital commerce;tax law;tax administration |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:phd:rpseri:rps_2024-04&r=pub |
| By: | Lundberg, Jacob (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This study provides a comprehensive analysis of the generational wealth transfer within Sweden’s public pay-as-you-go pension system introduced in 1960. Using extensive administrative registers, the paper quantifies the contributions made and benefits received by each birth cohort. The findings reveal a substantial fiscal imbalance favouring the initial generation (born in the early 20th century), who received a net gain of $1.5 trillion in today’s present value, equivalent to up to 13% of their discounted lifetime income. This windfall for the initial generation resulted in an implicit tax on current workers, accounting for 70% of their pension contributions. However, the study also highlights the effectiveness of Sweden’s 1999 notional defined-contribution pension reform in stabilizing this imbalance. Unlike many international counterparts, Sweden’s reformed system successfully mitigates further generational inequities in the pension system. |
| Keywords: | Pensions; Social security; Pay-as-you-go; Generational equity; Generational accounting |
| JEL: | H55 N34 |
| Date: | 2024–05–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1488&r=pub |
| By: | Emanuel Gasteiger (Institute for Mathematical Economics and Statistics, Vienna University of Technology); Michael Kuhn (International Institute for Applied Systems Analysis (IIASA)); Matthias Mistlbacher (Institute for Mathematical Economics and Statistics, Vienna University of Technology); Klaus Prettner (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | While automation technologies replace workers in ever more tasks, robots, 3D printers, and AI-based applications require substantial amounts of electricity. This raises concerns regarding the feasibility of the energy transition towards mitigating climate change. How does automation interact with conventional capital in driving energy demand and how do taxes on robots and taxes on electricity affect the adoption of robots and AI? To answer these questions, we generalize a standard economic growth model with automation and electricity use. In addition, we augment the model with electricity taxes and robot taxes and show the mechanisms by which these taxes affect automation. We find that an electricity tax serves a similar purpose as a robot tax. However, a robot tax is much more difficult to implement from a practical perspective. |
| Keywords: | Automation, Robots, Growth, Electricity Use, Energy Taxes, Robot Taxes |
| JEL: | O11 O14 H21 H23 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp364&r=pub |
| By: | Andrew Garin; Emilie Jackson; Dmitri K. Koustas |
| Abstract: | Rising self-employment rates in U.S. tax data that are absent in survey data have led to speculation that tax records capture a rise in new “gig” work that surveys miss. Drawing on the universe of IRS tax returns, we show that trends in firm-reported payments to “gig” and other contract workers do not explain the rise in self-employment reported to the IRS; rather, that increase is driven by self-reported earnings of individuals in the EITC phase-in range. We isolate pure reporting responses from real labor supply responses by examining births of workers’ first children around an end-of-year cutoff for credit eligibility that creates exogenous variation in tax rates at the end of the tax year after labor supply decisions are already sunk. We find that ex-posing workers with sunk labor supply to negative marginal tax rates results in large increases in their propensity to self-report self-employment—only a small minority of which leads to bunching at kink-points. Consistent with pure strategic reporting behavior, we find no impact on reporting among taxpayers with no incentive to report additional income and no effects on firm-reported payments of any kind. Moreover, we find these reporting responses have grown over time as knowledge of tax incentives has become widespread. Quantification exercises suggest that changes in taxpayer reporting behavior are a major driver of discrepancies between self-employment trends in self-reported and third-party reported data. Our findings suggest caution is warranted before deferring to self-reported tax data over other data sources when measuring labor market trends. |
| JEL: | H26 J21 J41 J46 J82 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32368&r=pub |
| By: | Gornick, Janet C.; Brady, David; Marx, Ive; Parolin, Zachary (Columbia University) |
| Abstract: | Income supports in the U.S. rely heavily on targeting based on means testing, categorical eligibility, or both. One result is that some groups are relatively underserved, often because they fall between the cracks of existing categories. One such group in the U.S. is non-elderly, nondisabled, childless adults. We assess poverty rates and poverty reduction—the extent to which taxes and transfers reduce market-generated poverty—in the U.S. compared to six other high-income countries: Canada, Czech Republic, Finland, Ireland, Netherlands, and the United Kingdom. Each of these countries reduces poverty more than does the U.S. and/or achieves lower post-tax-post-transfer poverty rates. Based on our cross-national comparative assessment—drawing on both microdata and country-level indicators—we offer some lessons for the U.S. First, the U.S. workforce is notable for its large share of low-wage workers. The U.S. could lower the incidence of low-paid work, and thus reduce poverty among the employed, by increasing the minimum wage at the federal and/or state and local levels, and by expanding the share of the workforce covered by collective agreements. Second, both income taxes and social contributions are pushing childless adults into poverty—more so in the U.S. than elsewhere. The U.S. could mitigate poverty among childless adults via any of a number of tax-related reforms. Third, our results indicate that U.S. income transfers, for this group, stand out in how meager they are. The U.S. could ameliorate poverty in this often-overlooked group by providing more-extensive income transfers, to those both in and out of work. (Stone Center on Socio-Economic Inequality Working Paper) |
| Date: | 2024–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:ja6em&r=pub |
| By: | Jing Ding; Lei Jiang; Lucy Msall; Matthew J. Notowidigdo |
| Abstract: | In 2020, local governments in China began issuing digital coupons to stimulate spending in targeted categories such as restaurants and supermarkets. Using data from a large e-commerce platform and a bunching estimation approach, we find that the coupons caused large increases in spending of 3.1–3.3 yuan per yuan spent by the government. The large spending responses do not come from substitution away from non-targeted spending categories or from short-run intertemporal substitution. To rationalize these results, we develop a dynamic consumption model showing how coupons’ minimum spending thresholds create temporary notches that lead to large spending responses. |
| JEL: | E21 G50 H30 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32376&r=pub |