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on Public Finance |
| By: | Joel Slemrod |
| Abstract: | Taxation based on identity has a long, often sordid history, and persists to this day, usually with some subtlety. It is a relatively tame cousin of the blatant, violent, and genocidal policies that have targeted people of certain religions, races, and genders for millennia. It is, nevertheless, an issue to be confronted rather than ignored by public finance economists. This is especially true because the concept of identity played a prominent role in the US presidential election of 2024, and is likely to be at least an undercurrent to the policy debates beginning in 2025, including those concerning tax policy. Tax based on identity is difficult, although not impossible, to justify within standard optimal tax analysis, because in that framework the policy objective is usually framed as being anonymous (impartial) and eschews basing policy on disparate preferences. The most promising justification seems to be if, for example, race is systematically correlated with the failure of income to represent ability to pay. It then acts as a tag that can help achieve the desired allocation of tax burden at minimal efficiency cost. For unjustified identity-based tax policy, analysis can help to spot its existence and quantify its social welfare cost. |
| JEL: | H20 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34476 |
| By: | Sauer, Radek (Central Bank of Ireland, CESifo) |
| Abstract: | This paper analyzes the macroeconomic impact of corporate taxation. The analysis is conducted in a quantitative two-country model. First, the paper describes the long-run effects of corporate taxation. A reduction in the corporate-income tax rate increases GDP, wages, consumption, investment, and business density. The trade balance is at the same time negatively affected. Firms headquartered in a country which lowers its corporate tax become internationally less active and instead focus more on their domestic market. Next, the paper examines transitional dynamics that are induced by a corporate-tax reform. The short-run response of the economy can substantially differ from the long-run response. Finally, the paper investigates the effects of international profit shifting in high-tax and low-tax jurisdictions. |
| Keywords: | corporate taxation, macroeconomy, heterogeneous firms, multinationals, international spillovers, profit shifting. |
| JEL: | E62 F42 H25 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cbi:wpaper:12/rt/25 |
| By: | Eric Fabri |
| Abstract: | Abstract Why and how should we tax inheritances, gifts, and bequests? This article examines the political theory debate on inheritance taxation and identifies four main arguments and three objections in favor of and against it. It reviews the most common forms of inheritance taxation in OECD countries and proposes an alternative: a lifetime capital accessions tax. This alternative is broadly delineated to compare it with the “average inheritance tax” and assess which of these two options better meets the requirements of the arguments and objections previously stated. The analysis shows that the capital accessions tax is normatively superior to the average inheritance tax. It better satisfies the reasons we have for taxing intergenerational wealth transfers and offers strong replies to three classical objections to inheritance taxation. Discussing the details of the accessions tax allows us to show how it can respond to popular objections to inheritance taxation and gain popular support. |
| Keywords: | Capital accesions tax; Philosophy of taxation; Wealth Transfers; Inheritance; Gift; Bequest; John Stuart Mill; Inheritance taxation |
| JEL: | H20 D31 H29 |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/396620 |
| By: | Tanya Bandula-Irwin |
| Abstract: | Conventional portrayals of armed group taxation emphasize ad hoc and unpredictable schemes, yet many insurgents construct surprisingly state-like fiscal systems. This paper explains when and why armed groups institutionalize taxation—developing hierarchies, codified rules, dedicated offices, and internal enforcement—rather than relying on ad hoc extraction. I argue that institutionalization is primarily an adaptive response to a binding revenue imperative, conditional on sufficient organizational capacity. |
| Keywords: | Armed conflict, Taxation, Insurgency, Statebuilding, Fiscal capacity, Philippines |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-89 |
| By: | Shane Domican; Sijin Zhang (The Treasury) |
| Abstract: | Population ageing, income growth, and individuals shifting income into companies and trusts has materially changed New Zealand’s tax bases and revenue. We provide indicative analysis of these trends and four main insights: (1) An ageing population may result in an increase in GST revenues as older households spend their saved earnings. This could shift our tax base towards indirect taxes, however the size of this is relatively small. In addition, this result critically relies on assuming no behaviour change from households due to ageing. (2) On the other hand, there have been material behavioural changes. We show that there has been a rise in the ‘labour’ share of our personal tax base that is likely due to rising labour force participation, particularly by older individuals. We also show how, absent this rise in labour income from rising participation, an ageing population would have increased the ‘capital’ share of our personal tax base. (3) Fiscal drag has been significant as income growth moved more income into higher personal tax brackets. From 2011 to 2023, fiscal drag led to personal tax revenues rising by 1.6% of GDP. The distributional impact of fiscal drag is uneven and the full impact on New Zealanders depends on how the revenue is used. However, in the future, if fiscal drag continues, it’s likely to increasingly impact lower income individuals. (4) Taxpayers appear to have responded to gaps between the top personal tax rate and the entity tax rate by shifting more of their income into companies and trusts. This had a material and growing fiscal impact. The risk of sheltering in trusts has largely been removed with the alignment between top personal tax rate and trustee rate in 2024. However, there appears to have been growing sheltering in companies, indicating a potential shift in risk. We also show how this sheltering may explain some of the apparent rise in labour income for individuals as capital income is sheltered in these entities. Whether these trends continue in the future is uncertain. Our analysis shows that behavioural responses by taxpayers as well as future policy choices are key drivers of our tax bases and revenue. We hope the note highlights areas to have continued attention and vigilance. |
| JEL: | H20 D31 D33 |
| Date: | 2025–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nztans:an25/07 |
| By: | Ghulam Mustafa (Pakistan Institute of Development Economics) |
| Abstract: | Reforming Pakistans Tax Policy is one of the key instruments to make URAAN Pakistans goal of a trillion-dollar economy happen through internal resource mobilization. It is widely discussed that Pakistan`s tax policy suffers from a narrow base, relying heavily on regressive indirect taxes while elites evade payments. Weak enforcement allows widespread informality (50 percentof GDP) to escape taxation. Complex federal-provincial overlaps and frequent ad-hoc changes deter compliance and investment. Low progressivity (only 2 percentfile income tax) worsens inequality instead of redistributing wealth. Given such limitations of tax system, there is a dire need for conducting a study to gather evidence based on widespread literature available for Pakistan`s tax policy. The underlying piece of research maintains focus on two objectives: (i) evaluating the Pakistan`s tax system whether it is effective and flexible through a comprehensive literature review, and (ii) to reveal the contributions and research gaps by local researchers and organisations. The overall findings of the all- reviewed research papers demonstrate that in the short run, the estimates of elasticity and buoyancy were greater than unity for overall taxes and tax heads. Nonetheless, in long- run, all estimates went declining and characteristics of the system to work automatic stabilisers failed to work. Due to the system`s inability to respond positively and lowering resilience power, the country drowned in the vicious trap of debt and unsustainable economic growth. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pid:wpaper:2025:9 |
| By: | Jörgen Levin; Emmanuel Orkoh |
| Abstract: | Determining the optimal tax burden that maximizes compliance and revenue remains a major challenge in developing countries, partly due to the literature's focus on linear tax-compliance relationships. Using firm-level data from Ghana and an instrumental variable approach, this paper finds a nonlinear relationship: compliance rises with higher taxes up to a threshold of 45%, beyond which it declines. This threshold, more than double the average tax burden of 21%, varies by firm size and formality—medium-large firms (30%), micro (46%), small (49%), formal (41%), and semi-formal (46%). |
| Keywords: | Taxation, Tax compliance, Tax evasion, Ghana |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-91 |
| By: | Guylaine Nouwoue; Marc Ateba; Miguel A. Fonseca; Jannesquin Royer |
| Abstract: | We explore how instructing future taxpayers on basic tax information helps build a tax-paying culture under low state capacity. We embedded a randomized survey experiment in a large tax awareness campaign directed towards young adults in Cameroon. We randomly assigned 1, 962 public and private secondary school students from 42 classes to tax information classes. We provide causal evidence of significant effects on basic tax knowledge and compliance attitudes with differential treatment effects across gender, risk attitudes, and family backgrounds. |
| Keywords: | Tax compliance, Tax morale, Social norms, Tax evasion, Cameroon |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-84 |