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on Public Finance |
| By: | Pierre Bachas; Anne Brockmeyer; Roel Dom; Camille Marine Semelet |
| Abstract: | This paper documents new facts on corporate taxation and the revenue potential of corporate minimum taxes, leveraging firm-level tax returns from 16 countries. First, effective tax rates follow a humped-shaped pattern with firm size: small firms benefit from reduced rates, while large firms take up tax incentives, leaving mid-sized firms with the highest effective rates. On average, the effective tax rate for the largest 1 percent of firms is 2.2 percentage points lower than the average effective tax rate for the top decile of firms. Second, although statutory tax rates are above 15 percent in all sample countries, over a quarter of top firms face an effective rate below 15 percent, challenging the simple tax haven versus non-haven dichotomy. Third, a simple 15 percent domestic minimum tax for the top 1 percent firms could raise corporate taxes by 14 percent on average across countries, absent behavioral responses. In contrast, the global minimum top-up tax would only raise a quarter of this revenue due to its generous deductions and smaller number of firms in scope. |
| Date: | 2025–03–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11090 |
| By: | Matt Van Essen (Department of Economics, University of Tennessee); Ivan Anich (Department of Economics, University of Tennessee) |
| Abstract: | The classic Lindahl allocation in a public good economy is both Pareto efficient and individually rational. However, it is easy to generate examples where the Lindahl outcome violates our intuition about economic justice. We explore how a suitable generalization of Lindahl taxation can lead to fair outcomes. We alter Lindahl’s equilibrium approach so that consumers are given personalized price schedules for the public good (as opposed to simply personalized prices). The result is a special case of Mas-Colell and Silvestre’s cost share equilibrium. We show that any outcome on the individually rational Pareto frontier can be achieved by some generalized Lindahl equilibrium. We next set up an optimization problem to search for a “just” Lindahl equilibrium. A social welfare function is first used to select an outcome on the individually rational Pareto frontier. We then provide an algorithm to construct the price functions that induce the precise generalized Lindahl equilibrium that obtains this outcome. Finally, we present a mechanism that Nash implements the set of generalized Lindahl equilibria for our environment. |
| JEL: | C72 H21 H41 |
| URL: | https://d.repec.org/n?u=RePEc:ten:wpaper:2025-01 |
| By: | Van-Quy Nguyen (Faculty of Mathematical Economics, National Economics University, Hanoi, Vietnam); Jean-Marc Bonnisseau (Université Paris 1 Panthéon-Sorbonne, Centre d'Economie de la Sorbonne, Paris School of Economics); Elena L. Del Mercato (Université Paris 1 Panthéon-Sorbonne, Centre d'Economie de la Sorbonne, Paris School of Economics) |
| Abstract: | We consider a pure exchange economy with consumption externalities in preferences. We study commodity taxes and lump-sum transfers schemes, which lead to equilibrium allocations where all individuals are strictly better off. We extend the result of Geanakoplos and Polemarchakis (2008) on the generic existence of Pareto im- proving policies with uniform taxes and equal transfers to general non-separable preferences, when the number of individuals is strictly smaller than the number of commodities. We overcome this limitation by considering either uniform taxes with personalized lump-sum transfers, or personalized taxes with uniform lump-sum transfers. As in Geanakoplos and Polemarchakis (2008), we mainly use utility perturbations. We also provide the existence of Pareto improving policies for Bergson-Samuelson utilities and two-individual economies, without perturbing utilities |
| Keywords: | Consumption externalities; commodity taxes; lump-sum transfers; Pareto improvement |
| JEL: | D50 D60 D62 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:24007r |
| By: | Holmberg, Johan (Department of Economics at Umea School of Business, Economics and Statistics, and Uppsala Center for Fiscal Studies (UCFS)); Selin, Håkan (Institute for Evaluation of Labour Market and Education Policy (IFAU) and UCFS) |
| Abstract: | An increase in the dividend tax on shares of Swedish closely-held corporations, scheduled for January 1, 2018, was canceled at short notice. In a difference-in-difference setting, we examine how firms reacted to the canceled reform. We find that dividends payments increased in 2016 and 2017 and declined sharply in 2018, especially for cash-rich firms. However, cash holdings recovered quickly in 2018 and 2019, and the excessive dividend payouts did not affect investments. Paradoxically, the discontinued reform implied an additional tax burden for those engaged in intertemporal tax arbitrage. |
| Keywords: | Owner level taxes; tax planning; investments; employment |
| JEL: | G35 H32 |
| Date: | 2025–04–08 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2025_003 |
| By: | Cremer, Helmuth; Casamatta, Georges |
| Abstract: | We examine the optimal combination of direct and indirect taxes in the presence of tax avoidance. Our findings indicate that linear commodity taxes should be included in the optimal tax mix, even when they are subject to avoidance and when the conditions of the Atkinson-Stiglitz theorem hold. This is because taxing consumption—despite the possibility of avoidance—enhances the ability to screen true income, whereas income taxation alone depends solely on reported income. Additionally, we show that when utility is weakly separable, tax rates should be positive and uniform across goods if the subutility function is homothetic, leading to linear Engel curves. However, when Engel curves are nonlinear, commodity taxes need not be uniform. Furthermore, the optimal taxation of luxuries versus necessities depends on the distribution of productivity levels. |
| Keywords: | direct and indirect taxes; avoidance |
| JEL: | H21 H26 |
| Date: | 2025–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130515 |