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on Public Finance |
| By: | Tom G. Meling; Magne Mogstad; Arnstein Vestre |
| Abstract: | We quantify the extent of crypto tax noncompliance and evasion, and assess the efficacy of alternative tax enforcement interventions. The context of the study is Norway. This context allows us to address key measurement challenges by combining de-anonymized crypto trading data with individual tax returns, survey data, and information from tax enforcement interventions. We find that crypto tax noncompliance is pervasive, even among investors trading on exchanges that share identifiable trading data with tax authorities. However, since most crypto investors owe little in crypto-related taxes, enforcement strategies need to be well-targeted or cheap for benefits to outweigh costs. |
| JEL: | G5 H2 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32865 |
| By: | Mary Ann Bronson; Daniel Haanwinckel; Maurizio Mazzocco |
| Abstract: | How do different income taxation systems affect household decisions and welfare? We answer this question by first documenting the strong labor supply disincentives for secondary earners of the U.S. tax system and by using variations from the Bush Tax Cuts to assess their effects on intra-household specialization. We then develop a lifecycle model incorporating labor supply, marriage and divorce decisions with limited commitment, household production, human capital accumulation, and assortative mating. After estimating and validating the model with various datasets, we evaluate four tax systems: a U.S.-like income-splitting system, an individual taxation system, a flexible general joint system, and an income-splitting system with secondary-earner deductions. We find that the individual taxation system provides higher welfare than income splitting but increases inequality. The general joint system offers the highest welfare but is complex to implement. The income-splitting system with a secondary-earner deduction improves welfare and reduces inequality while maintaining simplicity. |
| JEL: | H2 H3 J1 J2 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32861 |
| By: | Cesa-Bianchi, Nicolò (Università degli Studi di Milano); Colomboni, Roberto (Università degli Studi di Milano); Kasy, Maximilian (University of Oxford) |
| Abstract: | We consider the problem of repeatedly choosing policies to maximize social welfare. Welfare is a weighted sum of private utility and public revenue. Earlier outcomes inform later policies. Utility is not observed, but indirectly inferred. Response functions are learned through experimentation. We derive a lower bound on regret, and a matching adversarial upper bound for a variant of the Exp3 algorithm. Cumulative regret grows at a rate of T2/3. This implies that (i) welfare maximization is harder than the multi-armed bandit problem (with a rate of T1/2 for finite policy sets), and (ii) our algorithm achieves the optimal rate. For the stochastic setting, if social welfare is concave, we can achieve a rate of T1/2 (for continuous policy sets), using a dyadic search algorithm. We analyze an extension to nonlinear income taxation, and sketch an extension to commodity taxation. We compare our setting to monopoly pricing (which is easier), and price setting for bilateral trade (which is harder). |
| Keywords: | optimal taxation, multi-armed bandits, experimental design |
| JEL: | C9 H21 C73 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17186 |
| By: | Christos Genakos; Blair Yuan Lyu; Mario Pagliero |
| Abstract: | We study the retail price pass-through of four major tax changes in petroleum products using daily pricing data from gas stations on small Greek islands. We find that (i) the pass-through of the tax hikes is five times higher than for the tax decrease, (ii) the pass-through of the tax hikes increases with competition, while that of the tax decrease does not, (iii) there is significant asymmetry in the speed of price adjustments, and, (iv) the asymmetric price adjustment cannot be explained by tacit collusion, instead the evidence suggests that search is the most plausible explanation. We dedicate this paper to the loving memory of Mario Pagliero, a brilliant economist and a dear friend, who passed away too soon. |
| Keywords: | pass-through, rockets and feathers, tax incidence, gasoline market, market structure, competition |
| Date: | 2024–08–30 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2028 |
| By: | Siamand Hesami (Department of Finance Bournemouth University, UK and Cambridge Resources International(CRI)); Hatice Jenkins (Department of Banking and Finance, Eastern Mediterranean University, Gazimagusa, Turkey); Glenn P. Jenkins (Department of Economics Queen’s University Canada, Cambridge Resources International Inc.and Cyprus International University, North Cyprus) |
| Abstract: | This paper systematically reviews the impact of electronic invoicing and prefilling tax returns on tax administration and compliance, adhering to the PRISMA guidelines. Our comprehensive literature search and analysis reveal that these technologies are crucial in reducing tax compliance and administration costs. The results indicate significant benefits, including reduced financial stress for firms, especially during development phases, and enhanced efficiency in tax administration processes. The study highlights how e-invoicing and prefilling systems simplify and improve the tracking of taxation, leading to increased efficiency in tax practices globally. This research contributes to understanding the transformative effects of digital technologies in taxation, demonstrating their potential in streamlining tax compliance and administrative procedures. |
| Keywords: | taxation; e-invoicing; prefilling of returns; tax administration; efficiency; compliance; tax technology. |
| JEL: | H25 H71 O33 M48 |
| Date: | 2024–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:qed:dpaper:4621 |
| By: | Nicolás Forteza; Elvira Prades; Marc Roca |
| Abstract: | On 28 December 2022, the Spanish government announced a temporary value added tax (VAT) rate reduction for selected products. VAT rates were cut on January 1, 2023 and are expected to go back to their previous level by mid-2024. Using a web-scraped data set, we leverage machine-learning techniques to classify each product according to categories of the official classification by the statistical office (COICOP5). Then we study the price effects of the temporary VAT rate reduction covering the daily prices of roughly 10, 000 food products sold on-line by a Spanish supermarket. To identify causal effects, we compare the evolution of prices for treated items (that is, subject to the tax policy) against a control group (food items out of the policy's scope). Our findings indicate that, at the supermarket level, the pass-through was almost complete. We observe differences in the speed of pass-through across different product types. |
| Keywords: | Price Rigidity, Inflation, Consumer Prices, Heterogeneity, Microdata, VAT Pass-Through |
| JEL: | E31 H22 H25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:951 |
| By: | Toshiyuki Uemura (School of Economics, Kwansei Gakuin University) |
| Abstract: | As of the 2024 fiscal year, Japan's R&D tax credit amounted to 763.7 billion yen, which is equivalent to approximately 5& of corporate tax revenue and the largest loss of tax revenue among special tax measures. Nevertheless, the R&D tax credit is still necessary because there is a positive externality in firms' R&D activities; even if results are produced, there is a public goods-like characteristic wherein they are free-ridden. Thus, if left to the market mechanism, firms' R&D activities will be underestimated. Information asymmetry, uncertainty, and the need to secure funding for R&D activities might also arise. While it is possible to support R&D activities through subsidies or other policy measures, the R&D tax credit has a lower application cost than subsidies requiring advanced applications and post-event reporting of results, thus offering greater benefits to firms. However, as this causes a significant loss in tax revenue, there is a great deal of interest in the results of the R&D tax system, which has led to many empirical analyses on this topic. Subsequently, this study comprehensively surveys previous empirical analyses of Japan's R&D tax credit system and highlights the importance of analyzing the system from the cost of capital perspective. I then present a model of firm behavior that incorporates the R&D tax system, derives the cost of capital, and theoretically examines the after-tax marginal cost of R&D and the B index. Finally, the results obtained from estimating the after-tax marginal cost and B index based on Japan's R&D tax system demonstrate that Japan's system favors small and medium-sized enterprises over large firms. |
| Keywords: | R&D tax system, after-tax marginal cost, B index |
| JEL: | H25 H32 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:276 |