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on Public Finance |
| By: | Paweł Doligalski; Piotr Dworczak; Mohammad Akbarpour; Scott Duke Kominers* |
| Abstract: | Policymakers often distort goods markets to effect redistribution—for example, via price controls, differential taxation, or in-kind transfers. We investigate the optimality of such policies alongside the (optimally-designed) income tax. In our framework, agents differ in both their ability to generate income and their consumption preferences, and a planner maximizes a social welfare function subject to incentive and resource constraints. We uncover a generalization of the Atkinson-Stiglitz theorem by showing that goods markets should be undistorted if the heterogeneous consumption tastes (i) do not affect the marginal utility of disposable income, (ii) do not enter into the social welfare weights and (iii) are statistically independent of ability. We also show, however, that market interventions play a role in the optimal resolution of the equity-efficiency trade-off if any of the three assumptions is relaxed. In a special case of our model with linear utilities, binary ability, and continuous willingness to pay for a single good, we characterize the globally optimal mechanism and show that it may feature meanstested consumption subsidies, in-kind transfers, and differential commodity taxation |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/787 |
| By: | Arun Advani; David Burgherr; Andy Summers |
| Abstract: | We study international migration responses of the super-rich to taxes using UK administrative data and a difference-in-differences design. We exploit a reform that removes access to a tax break on foreign income for foreigners based on their number of years in the UK, allowing us to compare individuals with similar incomes and wealth. The reform reduces the net-of-tax rate of affected taxpayers by 19%. Emigration flows increase significantly in response, but only temporarily. Overall, the number of affected super-rich in the UK decreases by 0.26% for a 1% decline in the net-of-tax rate. Those who remain UK-resident increase reported income and income tax by around 50%, driven by foreign income coming into scope of UK tax, rather than investments being onshored. Emigrants induced to leave by the reform pay substantially less tax, but more than half still report non-zero UK income three years after leaving. By contrast, emigrants unaffected by tax changes retain a much smaller economic and fiscal footprint in the UK. |
| Keywords: | taxation, migration, super-rich, capital income, inequality, mobility |
| JEL: | F22 H24 H31 J61 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11870 |
| By: | Gagnie Pascal Yebarth (CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre) |
| Abstract: | This paper compares ad valorem and per-unit taxes in a bilateral market where all traders have market power. To do so, we use a simple prototype of strategic market games, namely bilateral oligopoly models, and show that ad valorem taxation welfare-dominates per-unit taxation under strategic bilateral trade. Moreover, ad valorem and per-unit taxes have qualitatively different effects on strategic equilibrium offers. |
| Keywords: | Ad valorem taxation, Noncooperative oligopoly, Per unit taxation, Welfare |
| Date: | 2025–03–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05066263 |
| By: | Jizhou Wang; Xiaodan Fang; Lei Huang; Yongfeng Huang |
| Abstract: | Economic inequality is a global challenge, intensifying disparities in education, healthcare, and social stability. Traditional systems like the U.S. federal income tax reduce inequality but lack adaptability. Although models like the Saez Optimal Taxation adjust dynamically, they fail to address taxpayer heterogeneity and irrational behavior. This study introduces TaxAgent, a novel integration of large language models (LLMs) with agent-based modeling (ABM) to design adaptive tax policies. In our macroeconomic simulation, heterogeneous H-Agents (households) simulate real-world taxpayer behaviors while the TaxAgent (government) utilizes LLMs to iteratively optimize tax rates, balancing equity and productivity. Benchmarked against Saez Optimal Taxation, U.S. federal income taxes, and free markets, TaxAgent achieves superior equity-efficiency trade-offs. This research offers a novel taxation solution and a scalable, data-driven framework for fiscal policy evaluation. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.02838 |
| By: | Panagiotis Asimakopoulos |
| Abstract: | The aim of this paper is to document tax legislation and create a dataset, consisting of 120 laws that brought significant changes in the vast majority of categories of taxes in Greece from 1974 to 2018. We create an exhaustive Tax Law Database consisting of Laws that brought significant changes in the tax system and more importantly covered the vast majority of categories of taxes in Greece from 1974-2018. Our dataset, tax revenue figures, national accounts covered the period up to 2018 excluding Greece exit process from enhance fiscal surveillance, government change after election of 2019 and Covid-19 implications. |
| Keywords: | Taxation policy, structural reforms, fiscal policy. |
| JEL: | E62 E63 |
| Date: | 2025–04–04 |
| URL: | https://d.repec.org/n?u=RePEc:eei:rpaper:eeri_rp_2025_04 |
| By: | Jasmin Vietz; Ingrid Hoem Sjursen |
| Abstract: | Non-state actors, such as religious institutions and leaders, play a central role in governance and social life in many low- and lower-middle-income countries. We examine whether information about how tax revenues are used for public goods and service provision increases voluntary tax compliance, and whether religious leaders can serve as more effective senders of this information than tax officials. Using a lab-in-the-field experiment in Tanzania, we find that providing information increases participants’ compliance, but only when delivered by a religious leader. These findings highlight the potential of religious leaders in enhancing tax compliance where trust in state institutions is limited. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ifowps:_415 |