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on Public Finance |
| By: | Alejandro Esteller-Moré; José María Durán-Cabré; Christos Kotsogiannis; Luca Salvadori |
| Abstract: | Enforcing wealth tax compliance among high-net-worth individuals is particularly challenging. Using administrative data on the Net Wealth Tax for Catalan taxpayers over the 2011–2020 period, this paper evaluates the impact of audits on voluntary compliance. The evidence suggests that wealth tax audits do enhance compliance, but the impact is short-lived — and driven by taxpayers rebalancing their tax evasion and avoidance responses. On the institutional side, the results indicate that Spain's overlapping tax audit mandates can create coordination frictions that reduce the efficiency and effectiveness of audit-based enforcement of the New Wealth Tax. Effective enforcement depends not only on robust audit strategies, but also on coherent institutional design and sound tax policy. |
| Keywords: | overlapping tax audit mandates, tax audit evaluation, tax compliance, Tax evasion, wealth tax |
| JEL: | H26 D31 O17 D02 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1527 |
| By: | Chen, Xuyang; Sun, Rui |
| Abstract: | This paper investigates how the OECD's global minimum tax (GMT) affects multinational enterprises (MNEs) behavior and countries' corporate taxes. We consider both profit shifting and capital investment responses of the MNE in a formal model of tax competition between asymmetric countries. The GMT reduces the true tax rate differential and benefits the large country, while the revenue effect is generally ambiguous for the small country. In the short run where tax rates are fixed, due to tax deduction of the substance-based income exclusion (SBIE), a higher minimum rate exerts investment incentives but also incurs a larger revenue loss for the small country. We show that under high (low) profit shifting costs the former (latter) effect dominates so that the small country's revenue increases (decreases). In the long run where countries can adjust tax rates, the GMT reshapes the tax game and the competition pattern. In contrast to the existing literature, we reveal that the minimum rate binds the small country only if it is low. With the rise of the GMT rate, countries will undercut the minimum to boost real investments and collect top-up taxes. Our simulations show that introducing a GMT with moderate minimum rate raises both countries' revenues and the large country's welfare. However, it may reduce the small country's welfare if the welfare weight of private income is high. |
| Keywords: | Corporate taxes, Global minimum tax, Profit shifting, SBIE, Tax competition |
| JEL: | F21 F23 H25 H73 H87 |
| Date: | 2025–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126538 |
| By: | Kazuhiko Sumiya; Jesper Bagger |
| Abstract: | This paper provides quasi-experimental evidence on how income taxes affect gross hourly wages, utilizing Danish administrative data and a tax reform that introduced joint taxation. Exploiting spousal income for identification, we present nonparametric, difference-in-differences graphical evidence among husbands. For low-income workers, taxes have negative and dynamic effects on wages; their wage elasticity with respect to net-of-marginal-tax rates is 0.4. For medium-income workers, the effects are smaller and insignificant. Wages respond to taxes through promotions or job-to-job transitions. Neither daily nor annual hours worked respond significantly; consequently, annual earnings respond to taxes primarily through hourly wages, rather than through labor supply. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.16483 |
| By: | Johannes Gallé; Rodrigo Oliveira; Daniel Overbeck; Nadine Riedel; Edson R. Severnini |
| Abstract: | This paper provides the first comprehensive evidence on how firms in emerging economies respond to carbon taxation. Using detailed administrative data, we study the announcement and implementation of South Africa’s 2019 carbon tax—a potential trailblazer for other developing countries with limited state capacity amid the global expansion of carbon pricing. Contrary to concerns that carbon taxes might hinder growth or employment, we find no negative effects on firm performance or jobs. Firms facing higher effective tax rates increased activity following the tax’s announcement, four years before implementation, likely reflecting the resolution of regulatory uncertainty and efforts to mitigate stranded asset costs. While we find no measurable reduction in emissions—likely due to this anticipatory behavior—our results suggest that carbon taxation can be implemented without harming economic outcomes, even in the short term and in low- and middle-income settings. |
| JEL: | H23 O13 O55 Q52 Q58 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34406 |
| By: | Ms. Li Liu; Mr. Alexander D Klemm; Parijat Lal |
| Abstract: | This paper investigates the effects of withholding taxes on cross-border trade in services, using a newly compiled dataset covering the universe of bilateral service imports and withholding tax rates from 2005 to 2021. Employing a theoretical framework that highlights the role of withholding taxes in curbing base-eroding payments, the empirical analysis reveals significant effects, with estimated semi-elasticities of 4 for royalties, 1 for technical fees, and 1 for total service import. |
| Keywords: | Services Trade; Corporate Taxation; Withholding Taxes; Profit Shifting |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/214 |
| By: | Leonard Gregor; Justus Haucap |
| 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:ces:ceswps:_12214 |
| By: | Jean-Marc B. Atsebi; Nikolay Gueorguiev; Manabu Nose |
| Abstract: | Building on previous studies, we propose a robust estimation strategy to uncover the causal effects of tax administration strength on tax revenue in 121 countries over the period 2014–2022. Our novel approach utilizes a unique expert survey to construct an Operational Strength Index of tax administration, using the International Survey on Revenue Administration (ISORA), and employs an instrumental variable strategy based on the IMF Fiscal Affairs Department’s Capacity Development programs. We find that strengthening tax administration significantly boosts tax revenue, particularly in emerging and developing economies, and especially in countries with lower levels of informality, stronger institutions, and higher financial development. These findings carry important policy implications for governments and development partners aiming to enhance tax administration capacity and strengthen public finances overall. |
| Keywords: | Tax Administration; Tax Policy; ISORA |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/219 |