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on Public Finance |
By: | Mr. Irving Aw; Brendan Crowley; Mr. José M. Garrido |
Abstract: | Countries differ in their approaches to the treatment of tax claims in insolvency. Historically, most countries have granted priority to tax claims. In the late 20th century, however, some countries abolished or reduced tax priorities at the same time that sweeping insolvency reforms were introduced. Since then, the debate over whether tax claims should be afforded priority in insolvency has continued. This paper reviews the various legal techniques used to protect tax claims in a wide range of countries, the arguments in favor and against tax priorities, and advocates for an empirical approach to analyzing this complex problem. |
Keywords: | Bankruptcy; Insolvency; Tax Policy; Credit |
Date: | 2025–06–13 |
URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/118 |
By: | Naritomi, Joana; Nyamdavaa, Tsogsag; Campbell, Stephanie |
Abstract: | Over the past decade, governments worldwide have introduced incentive programs - often in the form of lottery prizes - to encourage consumers to help combat tax evasion. While similar programs date back to the 1950s, the rapid expansion of Value Added Tax (VAT) systems in developing countries, combined with the Information Technology revolution, has reshaped the tax enforcement policy toolbox, leading to a recent surge in enforcement policies through consumer incentives. This paper reviews the rationale behind these policies, documents variations in their design, and examines the conditions under which they can enhance compliance and raise revenue. |
Keywords: | tax compliance; VAT; tax enforcement; consumer rewards; lotteries |
JEL: | H25 H26 E26 |
Date: | 2025–05–16 |
URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127223 |
By: | William Chandler; Alastair Thomas; Frederic Tremblay |
Abstract: | The value-added tax (VAT) has proved to be a highly effective tool at raising revenue in developed and developing countries alike. However, the effective operation of the VAT breaks down in the presence of exemptions. Unlike zero rates, exemptions deny input tax credits, thereby increasing production costs and resulting in VAT being embedded within the prices of goods and services. This paper develops a VAT model based on input-output table and household budget survey data for 29 European countries to examine the effects of VAT exemptions on final prices and to assess the merits of their use. Simulation results show that exemptions suffer from the same targeting problems as reduced VAT rates, but, in addition, they are non-transparent and have unpredictable and counterproductive indirect effects. These effects are in addition to the well-known distortionary impact of exemptions on production decisions, and their creation of incentives to self-supply. The paper concludes that the use of exemptions should be limited to addressing pragmatic concerns, such as the disproportionate compliance costs of small businesses and the practical difficulty in taxing margin-based financial services. |
Date: | 2025–05–13 |
URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11120 |
By: | Gabriel Chodorow-Reich |
Abstract: | Economists have widely varying opinions of how corporate taxation affects aggregate investment, output, and wages. This disagreement reflects a 60-year history of misapplication of the neoclassical theory of investment to interpret empirical work and guide policy analysis. In this article I reconsider the accumulated evidence relating tax policy to firm investment through the lens of the neoclassical theory. Empirical work suggests a range for the firm-level, short-run semi-elasticity of the investment-to-capital ratio to the user cost of -0.25 to -0.75. The mid-point of this range translates into values for the elasticity of firm revenue to capital of between 0.22 and 0.35. The implied general equilibrium, long-run elasticity of capital to the user cost can differ substantially from leading policy models. The elasticity of the wage to the user cost ranges from -0.3 to -0.7, or from -0.1 to -0.2 for changes to the user cost in the C-corporate sector alone. In the relatively low-tax regime in the U.S. in 2024, the neoclassical contribution to higher output from higher capital cannot rationalize more than modest dynamic tax revenue offsets from further reductions in corporate taxation. |
JEL: | E23 G31 H25 |
Date: | 2025–06 |
URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33922 |
By: | Charles Yuji Horioka |
Abstract: | In this paper, we discuss bequests and other intergenerational transfers and what impact they have on the consumption, saving, and labor supply behavior of households. We show that bequests and other intergenerational transfers are prevalent in most countries, that they are sometimes motivated by altruism and sometimes by selfishness, that they affect the consumption and saving behavior of households to some extent, especially that of elderly households, that they affect the labor supply behavior of households, especially that of bequest recipients, and that they have important policy implications. |
JEL: | D11 D12 D14 D15 D31 D64 E21 H31 J22 |
Date: | 2025–06 |
URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33927 |
By: | Jonathan S. Hartley; Kevin A. Hassett; Joshua D. Rauh |
Abstract: | The Tax Cuts and Jobs Act of 2017 (TCJA) marked the first time in three decades that material changes were made to the corporate tax code of the United States. We use TCJA as a quasi natural experiment to estimate the impact of changes in user cost of capital on investment. Following the method of Auerbach and Hassett (1991), using cross-sectional data we find that the user cost is associated with higher rates of investment consistent with previous studies. BEA asset types with greater reductions in user cost of capital and marginal effective tax rate (METR) after the 2017 TCJA had greater statistically significant increases in their investment rates several years after the tax reform. Specifically, we find the magnitude of a 1 percentage point decrease in user cost is associated with a 1.68 to 3.05 percentage point increase in the rate of investment, larger than prior estimates of the responsiveness of investment with respect to user cost of capital. |
JEL: | E22 H20 H25 |
Date: | 2025–06 |
URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33914 |
By: | Christian Bayer; Fabio Stohler |
Abstract: | If households self‐select into a risky high‐income state through investment, increased government debt can stimulate investment and improve welfare. In a heterogeneous agent endogenous growth model, government debt helps households smooth consumption and encourages investment in risky, high‐return assets, crowding in aggregate growth. However, when debt becomes excessive, capital crowding out and distortionary taxation negate these benefits. Using a model calibrated to U.S. data, we show that this crowding‐in effect suggests a higher optimal debt‐to‐GDP ratio than currently observed. |
Keywords: | Incomplete Markets, Public Debt, Endogenous Growth, Portfolio Choice |
JEL: | D31 E21 G11 H63 O43 |
Date: | 2025–06 |
URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_691 |
By: | Christl, Michael; Köppl-Turyna, Monika |
Abstract: | This paper extends the traditional concept of disposable income by including in-kind transfers for education and health as well as consumption taxes in the analysis. This extended view of tax-benefit systems offers a more comprehensive understanding of redistribution mechanisms within countries and facilitates crosscountry comparisons. As a first step, our analysis identifies households as either net contributors or net beneficiaries based on this extended income concept. Our results show that there is considerable variability in net fiscal contributions across households, influenced by factors such as income level, household composition and age. We find that extending the income concept reduces the number of net contributor households, as the monetary effect of in-kind benefits outweighs the effect of consumption taxes paid. However, the number of net contributor households varies considerably across EU Member States. In a second step, we take a life-cycle perspective and estimate the contribution of each age cohort in each EU Member State. Our results show that individuals contribute very differently over the life cycle across Member States and that these contributions are highly correlated with individuals' retirement decisions. We show that corporatist welfare state regimes in particular tend to have low and even negative life cycle contributions compared to universal welfare state systems and the Baltic insurance systems, with early retirement playing a crucial role in shaping these differences. |
Keywords: | tax-benefits model, EUROMOD, welfare state, in-kind benefits, indirect taxes, redistribution |
JEL: | H23 I38 H24 D31 |
Date: | 2025 |
URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1620 |
By: | Wang, Jingxuan; Wei, Yuchen; Galizzi, Matteo M.; Kwan, Hoi Shan; Zee, Benny Chung Ying; Fung, Hong; Yung, Tony Ka Chun; Wong, Eliza Lai Yi; Yue, Qianying; Lee, Michelle Kit Ling; Wu, Yushan; Wang, Kailu; Wu, Hongjiang; Yeoh, Eng Kiong; Chong, Ka Chun |
Abstract: | Taxation on sugar-sweetened beverages (SSBs) is proposed as a measure to address the health consequences of excessive sugar intake, yet research on its implementation in Asian contexts is limited. This study examined the perceptions, willingness-to-pay, and associated socio-demographics of SSB taxation in Hong Kong, an affluent Asian setting. A random-sampled telephone survey was conducted with 1, 250 Hong Kong adults. We used the maximum willingness to pay (WTPM), defined as the highest accepted price that a subject willing to consume SSB products, as a measure of willingness to pay. The contingent valuation method was employed to assess the WTPM for different types of SSBs. A multiple linear regression analysis showed that, about 50% of participants were aware of negative health impacts, and over 60% being confident in reducing their intake. Even with a 30% tax, approximately 70% of individuals remained willing to continue consuming SSBs. Non-diet soft drinks had the highest WTPMs (83% of current price), while parents reported higher WTPM for their children (74%) than for themselves (66%). Full/part-time workers had higher WTPM, whereas higher income and better self-rated health correlated with lower WTPM. Full/part-time workers had higher WTPMs, while higher income and better self-rated health were associated with lower WTPMs. In summary, despite awareness of the potential health risks associated with consuming SSBs, a high tax rate was necessary to reduce SSB consumption, particularly among children and non-diet soft drinkers. Our study highlights how economic measures can influence consumer behavior and informs the implementation of such measures. |
Keywords: | sugar-sweetened beverage; taxation; perception; health policy |
JEL: | R14 J01 |
Date: | 2025–06–17 |
URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128414 |