|
on Public Finance |
| By: | Bastani, Spencer (Uppsala University); Waldenström, Daniel (Research Institute of Industrial Economics, Stockholm) |
| Abstract: | This paper examines the implications of Artificial Intelligence (AI) and automation for the taxation of labor and capital in advanced economies. It synthesizes empirical evidence on worker displacement, productivity, and income inequality, as well as theoretical frameworks for optimal taxation. Implications for tax policy are discussed, focusing on the level of capital taxes and the progressivity of labor taxes. While there may be a need to adjust the level of capital taxes and the structure of labor income taxation, there are potential drawbacks of overly progressive taxation and universal basic income schemes that could undermine work incentives, economic growth, and long-term household welfare. Some of the challenges posed by AI and automation may also be better addressed through regulatory measures rather than tax policy. |
| Keywords: | AI, automation, inequality, labor share, optimal taxation, tax progressivity |
| JEL: | H21 H30 O33 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izapps:pp212 |
| By: | Scott R. Baker; Pawel Janas; Lorenz Kueng |
| Abstract: | Empirical research in public economics, including our own, often uses variation in state and local taxes as an empirical laboratory to estimate causal relationships. A key concern is that other taxes might change at the same time. To assess this concern, we develop a dataset of state (1977–2022) and local (2000–2022) tax rates and revenue from personal income, corporate income, property, sales, and excise taxes. This new dataset generates two key results. First, we find that taxes of different types tend to co-move within a jurisdiction: a tax change of one type can more than double the likelihood of a second tax type changing in the same year. Local tax changes also co-move with tax changes enacted by the state they are located in. This positive correlation can upwardly bias elasticity estimates, but only moderately. For example, regressing state economic outcomes on the full set of state tax changes yields elasticities that are about 10–30% smaller than those obtained from using a single tax type in isolation. Second, we document that the mix of taxes across state and local jurisdictions is very different, and that these differences have become more pronounced over time as jurisdictions have increasingly become reliant on the single tax type—sales, personal or corporate income tax—that was most prominent for them in the earliest part of our sample. |
| JEL: | H20 H71 H72 H77 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32786 |
| By: | David R. Agrawal; Iuliia Shybalkina |
| Abstract: | Requiring firms, rather than individuals, to remit sales taxes improves tax compliance. In the U.S., this shift toward firm-based remittance rules for remote purchases occurred gradually after South Dakota v. Wayfair. Using comprehensive and high-frequency local sales tax revenue data, we show that due to the increased compliance after Wayfair, revenues increased in the average locality by 5.4% and subsequently increased 5.1% after states required platforms to pay taxes on behalf of marketplace vendors. Critically, these effects are mainly a result of substantial increases in small towns and counties, with much smaller effects in larger jurisdictions. Increases in tax compliance thus influence both the level of tax revenues as well as its distribution across places. |
| Keywords: | sales tax, online shopping, e-commerce, remittance rules, tax revenue, compliance |
| JEL: | H25 H71 L81 R51 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11252 |
| By: | Yunho Cho; James Morley; Aarti Singh |
| Abstract: | Using household survey data for the U.S. and Australia, we quantify the role of taxes and transfers in providing consumption insurance against income risk. While the two countries differ substantially in their degree of tax and transfer progressivity and the extent to which it reduces the variability of disposable income, we find using a semi-structural model of income, net taxes, and consumption that the overall role of taxes and transfers in affecting the elasticity of consumption with respect to permanent income shocks is similar, with an estimated 5.4 percentage point reduction for the U.S. versus 4.8 for Australia. We interpret this result using a stylized life-cycle model with incomplete markets. Counterfactual analysis for a calibrated version of the structural model shows that, while higher progressivity increases the role of taxes in providing consumption insurance, these effects are partially mitigated by less self-insurance given higher marginal tax rates. The level of wealth relative to income also reduces the effects of progressivity on consumption insurance. Thus, higher wealth-to-income ratios in Australia can explain why, despite higher progressivity, the impact of taxes and transfers on consumption insurance is similar to the U.S. |
| Keywords: | progressive taxes, redistributive transfers, consumption insurance, incomplete markets |
| JEL: | C13 C33 D12 D14 D15 E21 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-52 |
| By: | Thomas Eichner; Marco Runkel |
| Abstract: | The main insight of this paper is that moral behavior does not necessarily alleviate coordination problems or may even worsen them, if individuals possess different degrees of morality. We characterize heterogenous Alger-Weibull morality preferences in a canonical model of voluntary contributions to a public good. The analysis reveals a novel polarization effect which traces back to a ’preference for leadership’ and weakens (strengthens) the incentive to contribute to the public good for individuals with below (above) average morality. Equilibrium public good provision is not increased by morality, as long as there are homo oeconomicus individuals. An increase in morality of an individual may reduce total provision of the public good, if heterogeneity is large enough. Redistributive transfers are no longer neutral. |
| Keywords: | moral behaviour, Kantian ethics, heterogeneity, public goods |
| JEL: | C72 D91 H41 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11231 |