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on Public Finance |
| By: | Varjonen-Ollus, Reetta |
| Abstract: | This paper estimates the elasticity of taxable income (ETI) for the top 1% of income earners, utilising a change in taxation in 2013, when a new top tax bracket was added to the earned income tax schedule in Finland. The response of top earners is crucial in determining the revenue-maximising level of top income taxation, and this study contributes to the top income ETI literature by employing a differences-in-differences method comparing changes in income within the same income groups for different time periods. The results suggest that the ETI for top wage earners (0.5) may be higher than found in previous population estimates. This finding is primarily driven by individuals experiencing fewer labour market frictions, such as those who have changed employer or have multiple concurrent employers. |
| Keywords: | Behavioural response, income taxation, labour supply, H21, H24, fi=Verotus|sv=Beskattning|en=Taxation|, |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:180 |
| By: | Salvatore Ciucci (Dipartimento di Economia, Università degli Studi della Campania “Luigi Vanvitelli”) |
| Abstract: | This study extends the theory of tax evasion by presenting a model of collaborative tax evasion between buyers and sellers. Buyers differ only in their level of tax morale, and tax evasion occurs when the seller fails to issue a receipt for the transaction. To counteract this, the government can disrupt the collusion between sellers and buyers by offering a tax rebate to buyers who request and retain the transaction receipt. The theoretical findings show that the tax rebate introduces a policy trade-off for the government between aggregate quantity and tax revenue. Furthermore, the marginal effect of the rebate on aggregate quantity, tax revenue, and social welfare is ambiguous. This study provides a theoretical foundation for understanding and managing the economic inefficiencies that may arise from tax rebate policies. |
| Keywords: | Tax rebate, cooperative tax evasion, tax morale |
| JEL: | H00 H20 H26 H30 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.26 |
| By: | Siminski, Peter (University of Technology, Sydney); Wilkins, Roger (Melbourne Institute of Applied Economic and Social Research) |
| Abstract: | We examine the role of owner-occupied housing for income inequality. Departing from related work, we incorporate accrued capital gains, focus on long-run measures of income, and consider implications for tax progressivity. Using Australia as a case study, we show that housing income can have major implications for the apparent level and trends over time of inequality, progressivity of taxes and transfers, as well as the demographic profile of the rich and the poor. When imputed rent and accrued capital gains—neither of which are taxed—are included in the income base, the redistributive impact of income tax is reduced by 40%. |
| Keywords: | tax progressivity, housing, inequality |
| JEL: | D63 R21 H24 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18303 |
| By: | Hans Jarle Kind; Dirk Schindler; Guttorm Schjelderup |
| Abstract: | Digital Services Taxes (DSTs) and the OECD/G20 BEPS reforms are central pillars of current efforts to tax multinational digital platforms, yet their joint effects remain poorly understood. We develop a model of a platform that sells hardware to consumers and advertising to firms, with the two markets connected through cross-group network externalities. We show that a DST can have counterproductive effects: it may lower tax revenue in the implementing country, weaken downstream price competition, and reduce consumer surplus by inducing the platform to shift activity toward the untaxed side of the market. We further show that stricter transfer pricing regulation - a core element of BEPS - can paradoxically increase profit shifting when network effects are strong. |
| Keywords: | digital platforms, digital services tax, BEPS, profit shifting |
| JEL: | F23 H26 H25 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12302 |
| By: | Eberhartinger Eva; Speitmann Raffael (European Commission - JRC); Sureth-sloane Caren |
| Abstract: | This study investigates the impact of mandatory public country-by-country reporting (CbCR) on European banks’ engagement in tax and regulatory havens characterized by financial secrecy. Employing a difference-in-differences approach, we find that following the introduction of CbCR, European banks reduced their number of tax haven subsidiaries by approximately one-third compared to insurers, which were exempt from the disclosure requirement. Further analysis reveals that this decline is primarily driven by withdrawals from economically insignificant “dot tax havens” and from countries that serve as both tax and regulatory havens. Additionally, we observe that banks with low exposure to reputational risk prior to the reform are more likely to reduce their presence in bank havens. These results reveal that public CbCR prompts withdrawals from low-tax locations but only under specific conditions. Public CbCR curtails tax haven presence when both financial secrecy and reputational concerns are at play, but on its own may not curb tax haven use. These insights contribute to ongoing tax policy debates by highlighting the limitations and conditional effectiveness of transparency-driven regulations. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202505 |
| By: | Ashley C. Craig; Thomas Lloyd; Dylan T. Moore |
| Abstract: | How should taxes on externality-generating activities be adjusted if they are regressive? In our model, the government raises revenue using distortionary income and commodity taxes. If more or less productive people have identical tastes for externality-generating consumption, the government optimally imposes a Pigouvian tax equal to the marginal damage from the externality. This is true regardless of whether the tax is regressive. But, if regressivity reflects different preferences of people with different incomes rather than solely income effects, the optimal tax differs from the Pigouvian benchmark. We derive sufficient statistics for optimal policy, and use them to study carbon taxation in the United States. Our empirical results suggest an optimal carbon tax that is remarkably close to the Pigouvian level, but with higher carbon taxes for very high-income households if this is feasible. When we allow for heterogeneity in preferences at each income level as well as across the income distribution, our optimal tax schedules are further attenuated toward the Pigouvian benchmark. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.05602 |
| By: | Hugo Spring-Ragain (HEIP) |
| Abstract: | This paper develops a spatial-dynamic framework to analyze the theoretical and quantitative effects of a Land Value Tax (LVT) on urban land markets, capital accumulation, and spatial redistribution. Building upon the Georgist distinction between produced value and unearned rent, the model departs from the static equilibrium tradition by introducing an explicit diffusion process for land values and a local investment dynamic governed by profitability thresholds. Land value $V (x, y, t)$ and built capital $K(x, y, t)$evolve over a two-dimensional urban domain according to coupled nonlinear partial differential equations, incorporating local productivity $A(x, y)$, centrality effects $\mu(x, y)$, depreciation $\delta$, and fiscal pressure $\tau$ . Analytical characterization of the steady states reveals a transcritical bifurcation in the parameter $\tau$ , separating inactive (low-investment) and active (self-sustaining) spatial regimes. The equilibrium pair $(V ^*, K^*)$ is shown to exist only when the effective decay rate $\alpha = r + \tau - \mu(x, y)$ exceeds a profitability threshold $\theta = \kappa + \delta / I_0$, and becomes locally unstable beyond this boundary. The introduction of diffusion, $D_V \Delta V$, stabilizes spatial dynamics and generates continuous gradients of land value and capital intensity, mitigating speculative clustering while preserving productive incentives. Numerical simulations confirm these analytical properties and display the emergence of spatially heterogeneous steady states driven by urban centrality and local productivity. The model also quantifies key aggregate outcomes, including dynamic tax revenues, adjusted capital-to-land ratios, and net present values under spatial heterogeneity and temporal discounting. Sensitivity analyses demonstrate that the main qualitative mechanisms-critical activation, spatial recomposition, and bifurcation structure-remain robust under alternative spatial profiles $(A, \mu)$, discretization schemes, and moderate differentiation of the tax rate $\tau (x, y)$. From an economic perspective, the results clarify the dual nature of the LVT: while it erodes unproductive rents and speculative land holding, its dynamic incidence on built capital depends on local profitability and financing constraints. The taxation parameter $\tau$ thus acts as a control variable in a nonlinear spatial system, shaping transitions between rent-driven and production-driven equilibria. Within a critical range around $\tau_c$, the LVT functions as an efficient spatial reallocation operator-reducing inequality in land values and investment density without impairing aggregate productivity. Beyond this range, excessive taxation induces systemic contraction and investment stagnation. Overall, this research bridges static urban tax theory with dynamic spatial economics by formalizing how a land-based fiscal instrument can reshape the geography of value creation through endogenous diffusion and nonlinear feedback. The framework provides a foundation for future extensions involving stochastic shocks, adaptive policy feedbacks, or endogenous public investment, offering a unified quantitative perspective on the dynamic efficiency and spatial equity of land value taxation. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.21766 |
| By: | Niesten, Hannelore Maria L.; Ferraz Di Ricco, Luiza; Sakhonchik, Alena |
| Abstract: | New data from the World Bank’s Women, Business and the Law project shed light on the gender dimensions of taxation and public spending—two key fiscal policy tools that impact economic growth and poverty reduction. This working paper presents new cross-country evidence and descriptive insights drawn from both binding legal frameworks (laws and regulations) and supportive policy instruments (such as budget circulars, guidelines, and institutional mechanisms). Together, these data establish a global baseline for assessing how gender dimensions are embedded in fiscal systems. The data presented in this working paper are current as of December 31, 2024, and cover 81 economies for taxation and 50 for gender-responsive budgeting. The findings point to opportunities for deeper integration of gender into fiscal systems and highlight areas where this integration is still evolving—such as limited gender information and analysis in tax laws and administration, gaps in data systems, and evolving gender-responsive budgeting frameworks. The insights from the data suggest avenues for reform: revising tax and spending laws and policies to better address gender differences in economic outcomes, investing in gender-disaggregated data systems, and strengthening gender-responsive budgeting frameworks. Such efforts can help ensure that fiscal policies are evidence-based and contribute to improved economic outcomes for women and girls, while also advancing broader goals of revenue mobilization and efficient, well-targeted public spending. |
| Date: | 2025–12–04 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11273 |
| By: | Gwen-Jiro Clochard; Shubham Dey; Shusaku Sasaki; Taisuke Imai |
| Abstract: | This paper presents the first quantitative meta-analysis of the price elasticity of charitable giving under both rebate and matching schemes. We compile 151 elasticity estimates from 33 experimental studies and synthesize them using random-effects and multi-level models. Charitable giving is highly price-responsive: the pooled meta-analytic mean elasticity of total donations is -1.25, indicating that lowering the effective price of giving substantially increases charitable revenue. Although we observe considerable between-study heterogeneity and some evidence of publication bias, bias-adjusted estimates remain negative. Furthermore, elasticity is substantially more negative under matching (-1.98) than under rebate (-0.87), contradicting the theoretical prediction of equivalence but aligning with the original experimental findings in this literature. The rebate-matching difference is attenuated when moving from laboratory to field settings, although it persists. |
| Keywords: | charitable giving, rebate, matching, experiment, meta-analysis |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12310 |
| By: | Ekaterina Shabalina |
| Abstract: | This paper studies how tax progressivity affects monetary policy. Through the lens of a heterogeneous agent model with nominal rigidities it shows that, firstly, higher tax progressivity increases natural rate due to a lower demand for precautionary savings. Secondly, the effect of tax progressivity on the potency of monetary policy is small with a higher progressivity implying a slightly better inflation-output trade-off. Distributional effects of monetary policy, however, are amplified with a higher tax progressivity. |
| Keywords: | tax progressivity; monetary policy transmission; natural rate of interest; heterogeneous agents |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:rba:rbaacp:acp2025-03 |