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on Public Finance |
| By: | Claudio Agostini; Zareh Asatryan; Laurent Bach; Govindadeva Bernier; Marinho Bertanha; Katarzyna A. Bilicka; Anne Brockmeyer; Jaroslav Bukovina; Guillermo Falcone; Pablo Garriga; Yuxuan He; Petr Janský; Evangelos Koumanakos; Tomáš Lichard; Tomás Martins; Ján Palguta; Elena Patel; João Pereira dos Santos; Louis Perrault; Thomas Schwab; Nathan Seegert; Oliver Škultéty; Kristina Strohmaier; Maximilian Todtenhaupt; Guillermo Vuletin; Branislav Žúdel |
| Abstract: | Do firms respond similarly to corporate tax incentives across countries? We provide globally comparable estimates of the corporate elasticity of taxable income using administrative tax return data from sixteen countries and a unified empirical framework. Exploiting bunching at a common kink, zero taxable income, we estimate elasticities ranging from 0.08 to 1.9, with an average of 0.79. To explain this heterogeneity, we link elasticities to tax policy, firm characteristics, and country fundamentals. These differences imply that identical corporate tax reforms can generate sharply different revenue effects across countries, leading to substantial heterogeneity in the efficiency costs of corporate taxation. |
| JEL: | C14 H25 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34945 |
| By: | Tania Masi; Antonio Savoia; Kunal Sen |
| Abstract: | An influential literature suggests that the rise of taxation should come with a 'governance dividend': the quality of government should improve, because the taxpaying citizenry will subject the ruler to increased scrutiny. While this fits the history of nowadays advanced economies, it is less clear whether a governance dividend can materialize in less developed economies and, above all, which taxes are more likely to produce it. |
| Keywords: | Taxation, Income tax, Governance, Institutions, Economic development |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2026-22 |
| By: | Ricci Mattia (European Commission - JRC); Lanterna Federica |
| Abstract: | The application of reduced VAT rates in the EU generally aims to alleviate the regressivity of consumption taxation. However, while these measures generate redistribution across income groups, they also create redistribution effects within income groups, leading to arbitrary redistribution among households with similar incomes but different consumption patterns. Using the Analysis of Gini (ANOGI) decomposition, we evaluate the redistributive impact of reduced VAT rates across EU Member States. Our results indicate that, while reduced VAT rates lower the regressivity of VAT taxation, their total redistributive effect is modest. That is because the between-group pro-redistributive effect is largely offset by the within-group anti-redistributive one. This analysis highlights the limited effectiveness of reduced VAT rates as a tool for redistribution |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:taxref:202602 |
| By: | Kevin Parra Ramirez (Sciences-Po, Banque de France); Vincent Vicard (CEPII) |
| Abstract: | While multinational enterprises (MNEs) shift hundreds of billions in profits to low-tax jurisdictions annually, how they do remains disputed. Using firm-level data for France in 2018, we provide the first joint quantification of the three main profit-shifting channels: transfer mispricing in goods trade, intangible assets and services traded with tax havens, and intra-firm debt. We find empirical evidence for all three instruments, but transfer mispricing dominates quantitatively (€10 billion, 0.4% of GDP), followed by services (up to €6 billion) and debt (€2 billion). Although significant, these direct estimates account for half of total missing profits in France, as estimated indirectly from the location of MNE profits. We document two key blind spots likely to close this gap: cross-border digital payments by households and understudied debt instruments (e.g., securities). |
| Keywords: | Tax avoidance, Multinational firms, Profit shifting, FDI, Trade |
| JEL: | H26 H25 H32 F14 F23 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:043 |
| By: | Federico Corredor (Public Finance Research Cluster, Andrew Young School of Policy Studies, Georgia State University) |
| Abstract: | The Tax Cuts and Jobs Act of 2017 capped the federal deduction for state and local taxes (SALT), increasing the tax price of local public services for high-income residents in high-tax jurisdictions. This paper examines the impact of this policy on local government finances, exploiting variation in exposure across counties based on average pre-reform SALT deductions. Counties most exposed to the cap did not reduce public expenditures, experience declines in own-source revenues, or shift toward non-deductible revenue sources. These findings challenge the view that federal deductibility is essential for sustaining local fiscal capacity and underscore both the central role of property taxation in local public finance and the resilience of subnational governments to federal tax policy shocks. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ays:cslfwp:cslf2601 |
| By: | Masaya NISHIHATA; Yohei KOBAYASHI; Takayuki ISHIKAWA |
| Abstract: | This study conducted two natural field experiments in Yokohama City, Japan, to evaluate the effectiveness of behavioral nudges in promoting automatic debit registration for property tax payments. While much of the existing literature on tax compliance focuses on reminder letters, relatively little attention has been paid to payment method choice, despite its potential to reduce administrative costs associated with reminders and enforcement. We find that a nudge flyer and the inclusion of the owner code required for the application increase the probability of applying for automatic debit by 2.7 and 2.8 percentage points, respectively. When implemented together, the combined intervention increases adoption by 8.8 percentage points, suggesting complementarities between benefit-enhancing and cost-reducing components. Despite the increase in automatic debit adoption, we find no evidence that these interventions improve on-time payment within the time frame observed in our experiments. This may reflect low baseline delinquency among new taxpayers or the possibility that the interventions primarily affect taxpayers who would have paid on time even in the absence of automatic debit. Taken together, our findings highlight both the potential and the limits of behavioral nudges in improving tax administration outcomes. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26023 |
| By: | Berghäll, Elina |
| Abstract: | Amid aid cuts, developing countries’ public finance needs are constant and growing. Tax-to-GDP ratios exhibit a positive correlation with GDP per capita globally, suggesting that economic growth in developing countries could enhance domestic revenue mobilization (DRM) and reduce aid dependence over time. Yet there is little evidence to support this in the existing literature. World Bank income status upgrades represent economic growth milestones that may signal future aid reductions, potentially incentivizing governments to increase tax collection. Using synthetic control methods and synthetic difference-in-differences on panel data from the UNU-WIDER Government Revenue Dataset and World Development Indicators (1980-2022), this study examines whether such upgrades result in tax and government revenue increases as a share of GDP in sub-Saharan Africa (SSA). Results reveal that income status upgrades rarely have significant positive impacts on fiscal outcomes. By contrast, extensive robustness checks, including event-study difference-in-differences analyses, show upgrades to lower-middle or upper-middle-income status to be associated with a decline in public revenue per GDP. These findings imply that upgrades cannot be expected to meaningfully enhance DRM in SSA. |
| Keywords: | synthetic control method (SCM), synthetic difference-in-differences, tax revenue; income status, development aid, sub-Saharan Africa, H20, H27, H71, O11, O40, O55, fi=Verotus|sv=Beskattning|en=Taxation|, |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:183 |