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on Public Finance |
| By: | Manthos D. Delis (Audencia Business School); Emilios C. Galariotis (School of Production Engineering and Management); Maria Iosifidi (Montpellier Business School); Steven Ongena (University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)) |
| Abstract: | Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. We use a unique sample of small majority- owned firms that apply for credit, where only some firms (treated) experience a corporate tax cut. We show that after the decrease in corporate tax rates, the treated poorer business owners get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the treated richer. Ultimately, reducing the corporate tax rate predominantly increases the future income and wealth of richer business owners. |
| Keywords: | Corporate taxes, Economic inequality, Bank credit, Credit score |
| JEL: | G20 G21 H25 D63 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2481 |
| By: | Felix Bierbrauer (University of Cologne); Pierre Boyer (Ecole Polytechnique); Andreas Peichl (LMU Munich); Daniel Weishaar (LMU Munich) |
| Abstract: | We develop a theory of tax reforms for a setting with multi-dimensional heterogeneity amongst taxpayers and multiple economic decisions that are all subject to fixed and variable costs. The theorems in this paper provide a complete characterization of the conditions under which Pareto- or welfare-improving tax reforms exist. We focus on one application, the taxation of couples, and present a detailed analysis of the behavioral responses to taxation in this setting. Squaring the theorems with this analysis yields sufficient statistics for the existence of Pareto- or welfare-improving tax reforms. In the empirical part, we apply them to US data. Our findings include the following: Tax rates on secondary earnings are inefficiently high when secondary earnings are close to primary earnings. Also, reducing the tax system’s degree of jointness is not Pareto-improving. Whether it raises welfare depends on a trade-off between poverty alleviation and gender balance. |
| Keywords: | taxation of couples; pareto efficiency; tax reforms; optimal taxation; non-linear income taxation; |
| JEL: | C72 D72 D82 H21 |
| Date: | 2024–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:518 |
| By: | Ana Maria Santacreu; Ashley Stewart |
| Abstract: | An analysis examines how U.S. multinationals’ tax and profit-shifting strategies might affect yields on direct investment in tax havens versus G7 economies. |
| Keywords: | multinational corporations; taxes; profits; tax havens; investment |
| Date: | 2024–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:99189 |
| By: | Hayato Kato (Osaka University); Andreas Haufler (LMU Munich) |
| Abstract: | The Global Minimum Tax (GMT) is applied only to firms above a certain size threshold, permitting countries to set differential tax rates for small and large firms. We analyze tax competition among multiple tax havens and a non-haven country for heterogeneous multinationals to evaluate the effects of this partial coverage of GMT. Upon the introduction of a moderately low GMT rate, the havens commit to the single uniform GMT rate for all multinationals. However, gradual increases in the GMT rate induce the havens, and subsequently the non-haven, to adopt discriminatory, lower tax rates for small multinationals. Our calibration exercise shows that the implementation of a 15% GMT rate results in a regime where only the havens adopt split tax rates. Upon GMT introduction, welfare and tax revenues fall in the tax havens but rise in the non-haven, yielding a positive net gain worldwide. |
| Keywords: | global minimum tax; profit shifting; multinational firms; |
| JEL: | F23 H25 H87 |
| Date: | 2024–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:516 |
| By: | Oscar Claveria (AQR-IREA, University of Barcelona); Petar Soric (University of Zagreb) |
| Abstract: | This study examines the relationship between economic uncertainty and the redistributive effect of taxes and government transfers in the UK and the US over the period 1980-2021. We find that the sign of the relationship between uncertainty and redistribution goes from being negative at the beginning of the 1980s to taking a positive and significant sign in recent years. In the US, economic uncertainty Granger-causes the redistributive effect of taxes and transfers in the short run, but the same does not hold for the UK. |
| Keywords: | economic uncertainty; redistributive policy; income inequality; taxes; government transfers. JEL classification: C50; D30; E62; H50 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aqr:wpaper:202405 |
| By: | Pyddoke, Roger (Swedish National Road and Transport Research Institute (VTI)); From, Emma (Swedish National Road and Transport Research Institute (VTI)); Björklund, Gunilla (Swedish National Road and Transport Research Institute (VTI)); Andersson, Henrik (Swedish National Road and Transport Research Institute (VTI)) |
| Abstract: | This study examines how information about the effects of increased fuel taxes on fuel consumption, and with the possibility of compensating rural inhabitants (who use their cars more), impact the acceptance of fuel taxes and the psychological nature of the acceptance. Using a stratified survey in Sweden we analyze the support for increased carbon taxes for fuels. We find that 16 to 27 percent of the respondents support the proposed policy. A prime reason for this low support appears to be that most Swedes do not believe that higher fuel prices through taxation will lead to lower CO2 emissions from road transport. Equity concerns have also been shown to be a major objection against such tax increases, with a strong correlation between equity concerns and non-support for the tax increase. Our results suggest that neither information about the expected effect from taxation on emissions, nor the potential for redistribution, had an effect on the support for the taxes. When controlling for treatment, socioeconomic variables and demographic variables, the psychological variables showed that the respondents willing to support the increased fuel tax also had a positive attitude towards the tax, and a strong belief of their capacity to perform the behavior, and also a belief that supporting the tax is up to them. |
| Keywords: | Climate; Fuel tax; Pigouvian mechanism; Equity; Public support; Acceptance |
| JEL: | D72 D91 Q54 |
| Date: | 2024–11–29 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:vtiwps:2024_008 |
| By: | Wesley Blundell; Juan Sebastián Vélez-Velásquez |
| Abstract: | The impact of carbon taxes on consumer welfare and emissions in the transportation sector is influenced by both regulatory and market dynamics. As the sources of climate emissions from transportation evolve, how will this impact change in the future? Utilizing extensive data from retail fuel stations and wholesalers in Colombia, we estimate the factors affecting the pass-through of a carbon tax on gasoline prices. Our findings reveal that the pass-through to Colombian consumers is significant, often exceeding one. This phenomenon of "overshifting" vanishes when markets are regulated or when gas stations are vertically integrated with wholesalers. These results indicate that as the global use of carbon taxes to address climate externalities from automobile use increases, the welfare loss for consumers may be greater than what current literature, often focused on the United States, suggests. **** RESUMEN: El impacto de los impuestos al carbono sobre el bienestar de los consumidores y las emisiones en el sector del transporte está influenciado tanto por la dinámica regulatoria como por la del mercado. A medida que evolucionan las fuentes de emisiones climáticas del transporte, ¿cómo cambiará este impacto en el futuro? Utilizando datos para un amplio número de estaciones de servicio minoristas y mayoristas en Colombia, estimamos los factores que afectan la transferencia de un impuesto al carbono a los precios de la gasolina. Nuestros hallazgos revelan que la transferencia a los consumidores colombianos es significativa, a menudo superior a uno. Este fenómeno de "sobretransferencia" desaparece cuando los mercados están regulados o cuando las estaciones de servicio están integradas verticalmente con los mayoristas. Estos resultados indican que a medida que aumenta el uso global de los impuestos al carbono para abordar las externalidades climáticas del uso del automóvil, la pérdida de bienestar para los consumidores puede ser mayor que lo que sugiere la literatura actual, a menudo centrada en los Estados Unidos. |
| Keywords: | carbon tax, transportation, tax incidence, overshifting, gasoline, Impuesto al carbono, transporte, incidencia de impuestos, sobretransferencia, gas |
| JEL: | L91 L98 Q54 H23 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1292 |
| By: | Guido Ascari; Anna Florio; Alessandro Gobbi |
| Abstract: | Employing two different effective measures of future tax expectations in a local projection analysis on post-war U.S. data reveals that the effects of an anticipated government spending shock depend solely on expectations about future taxes. In contrast, tax foresight does not affect the transmission of unanticipated shocks. When agents expect taxes to rise (fall), the economy response to an anticipated government spending shock aligns with a monetary (fiscal) regime. Hence, tax foresight is a sufficient statistic to identify the effects of anticipated government spending shocks. We argue that this is consistent with recent literature on monetary and fiscal policy interaction. |
| Keywords: | Monetary policy interactions; fiscal policy interactions; Government spending; Fiscal foresight; |
| JEL: | E52 E62 E63 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:dnb:dnbwpp:821 |
| By: | Brunetti, Roberto; Gaigné, Carl; Moizeau, Fabien |
| Abstract: | We examine the role of land in wealth dynamics, and its consequences on efficiency and inequality by focusing on the interplay among agents’ bidding for location, mortgage market imperfections, and inheritance. We develop a model in which altruistic agents leave to their heirs a financial bequest and their housing wealth. The borrowing constraint generates a housing return premium and spatial wealth sorting, which translate into persistent inequality. Since altruism and the borrowing constraint distort land price formation, we discuss different corrective tax schedules. Land taxation cannot be disconnected from inheritance taxation, and must be levied on the inheriting generation. |
| Keywords: | Community/Rural/Urban Development, Consumer/Household Economics, Land Economics/Use, Public Economics |
| Date: | 2024–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:ags:inrasl:348477 |