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on Public Finance |
| By: | Lukyanov, Georgy; Ablyatifov, Emin |
| Abstract: | We embed honesty-based reputation into a Ramsey taxation framework with com-petitive firms and households. In a static benchmark with exogenous trust, there is a sharp cutoff below which the optimal policy sets no taxes and above which the optimal tax take rises with trust. In the dynamic model, beliefs evolve through noisy public monitoring of delivered public goods; the planner’s problem is well posed, the value is increasing and convex in beliefs, and optimal revenue is monotone in reputation with a trust threshold that is weakly below the static cutoff. With multiple broad instruments and symmetric monitoring, the dynamic force acts through the total revenue scale; the tax mix is indeterminate along an equivalence frontier. Blackwell-improving monitor-ing and greater type persistence expand the optimal scale and shift the trust threshold inward. The model delivers clear policy prescriptions for building fiscal capacity in low-trust environments and testable links between measured trust, verifiability, and revenue. |
| Keywords: | Optimal taxation; Government reputation; Ramsey problem; Credibility; Fiscal capacity |
| JEL: | H21 H30 E62 D82 C73 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131041 |
| By: | Rod Tyers (Economics Programme, University of Western Australia) |
| Abstract: | Motivation is offered for the scenario in which a large country, such as the US, imposing a general tariff, would make its citizens worse off. Notwithstanding revenue gains toward fiscal balance, standard theory anticipates contracting welfare. Incorporating monetary policy effects sees the potential for negative effects larger than the standard dead-weight efficiency losses if the monetary response is restrictive enough to target inflation. A global model is then used to simulate the effects a US general tariff, demonstrating that, while trading partners would be hurt by the tariff, the US economy would also contract, unless its own monetary policy were sufficiently expansionary to sustain the value of financial assets. Nonetheless, the tariff effects are also shown to be dwarfed by those of a proposed capital income tax break, which redirects investment to the US and would yield larger domestic gains and larger, more punitive, foreign losses. If trading partners retaliate in kind there is no welfare equilibrium under which the US adopts a general tariff only, though, under most criteria, the combination of tariffs and capital income tax relief turns out to be a dominant strategy for both the US and other regions. |
| Keywords: | general tariff, capital income tax break, monteary policy |
| JEL: | F3 F4 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:uwa:wpaper:25-08 |
| By: | Qiu, Xincheng (Peking University); Russo, Nicolo (Goethe University Frankfurt) |
| Abstract: | This paper examines income tax systems in over thirty countries over the past forty years using microdata from the Luxembourg Income Study. We show that income tax systems worldwide are well approximated by a two-parameter log-linear effective tax function. We provide country- and year-specific estimates and document several insights. First, higher average tax rates are associated with higher progressivity. Second, richer countries have more progressive tax systems. Third, progressivity varies by family structure, with marriage and children associated with higher progressivity. Finally, transfers play an important role in redistribution, making the overall tax-and-transfer function more progressive than the tax function. |
| Keywords: | family structure, income tax progressivity, taxation |
| JEL: | E62 H20 H30 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18190 |
| By: | Parolin, Zachary (The Institute for New Economic Thinking at the Oxford Martin School, University of Oxford); Glasner, Benjamin (Economic Innovation Group); Mincy, Ronald (Columbia University); Wimer, Christopher (Columbia University) |
| Abstract: | This study investigates whether expansions to the Earned Income Tax Credit (EITC) have reduced the intergenerational persistence of poverty in the United States. Using 50 years of Panel Study of Income Dynamics data, we estimate how variation in the generosity of the EITC across time, place, and family size differentially affects the long-run economic circum-stances of children born into poverty versus children not born into poverty. We find that the EITC has favorable long-run effects on pre-tax/transfer poverty overall, but not on post-tax/transfer poverty; instead, public income transfers received in adulthood effectively offset the higher pre-tax/transfer poverty rate among adults benefiting less from EITC expansions. Moreover, whether the EITC reduces intergenerational poverty depends largely on mobility measure, income definition, and model specification. We find that the EITC may reduce an absolute measure of poverty persistence based on pre-tax/transfer income; however, we find consistent evidence that the EITC does not reduce relative poverty persistence or improve any persistence measure based on post-tax/transfer income. Our conclusions are broadly consistent across 1, 296 alternative model specifications, and we are able to reconcile our findings with alternative conclusions from prior research. Employment-conditional refundable tax credits likely improve average long-run economic circumstances, but may be less effective than previously understood at reducing the intergenerational persistence of poverty. |
| Keywords: | EITC, poverty, intergenerational mobility |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2025-22 |
| By: | Gregor, Leonard; Haucap, Justus |
| Abstract: | This paper evaluates the temporary reduction in energy taxes implemented by the German government between June and September 2022. We use pricing and quantity data from the wholesale market for crude oil, gasoline, and diesel and find an average pass through of 80% to 85% of the tax cut, which amounts to a 3.7 cents per liter increase in wholesale prices net of tax. We do, however, document significant treatment heterogeneity over time and across regions within Germany. When weighting price effects by quantities sold, the estimated pass-through of the tax cut decreases to about 70% for gasoline and 58% for diesel, suggesting that refinery margins increased significantly during times of higher demand. |
| Keywords: | Pass-through, Tax reduction, Fuel prices, Wholesale markets |
| JEL: | H22 L13 L71 Q48 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:329637 |
| By: | Abhishek Seth (Indian Institute of Technology Roorkee); Manish Kumar Singh (Indian Institute of Technology Roorkee, xKDR Forum); Diya Uday (xKDR Forum) |
| Abstract: | Property tax is the most important source of own revenue for Indian cities, yet it has failed to keep pace with rapid urban economic growth. In this paper, we address this gap in two steps: first, we measure whether property taxes in India are buoyant, that is, whether they rise proportionately with income; and second, we examine whether buoyancy differs systematically across valuation systems - Annual Rental Value (ARV), Unit Area Value (UAV), and Capital Value (CV). Using a balanced panel of 2, 470 Urban Local Bodies in 23 states (2018-19 to 2022-23) from the City-Finance portal, we estimate buoyancy via fixed-effects regressions linking property tax demand to nominal GSDP. Our findings suggest modest overall buoyancy (0.96), with ARV outperforming CV and UAV. Robustness checks confirm the pattern, highlighting that valuation implementation quality, not statutory form, drives revenue responsiveness in rapidly urbanizing economies. |
| JEL: | H2 H71 H72 C23 R51 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:anf:wpaper:42 |