nep-pub New Economics Papers
on Public Finance
Issue of 2024‒04‒08
nine papers chosen by
Kwang Soo Cheong, Johns Hopkins University

  1. How to Tax Wealth By Mr. Shafik Hebous; Mr. Alexander D Klemm; Geerten Michielse; Ms. Carolina Osorio Buitron
  2. An Analysis of the Effect of Sunsetting Tax Provisions for Family Farm Households By McDonald, Tia M.; Durst, Ron
  3. The design of presumptive tax regimes in selected countries By Mariona Mas-Montserrat; Céline Colin; Bert Brys
  4. Is carbon tax truly more salient? Evidence from fuel tourism at the France-Germany border By Odran Bonnet; Etienne Fize; Tristan Loisel; Lionel Wilner
  5. Optimal redistribution and education signaling By Bastani, Spencer; Blumkin, Tomer; Micheletto, Luca
  6. The Long-Term Budget Outlook: 2024 to 2054 By Congressional Budget Office
  7. A reassessment of discretionary tax policy in the European Union: A cyclically-adjusted approach By Giovanni Carnazza; Federica Lanterna
  8. Using Rich Lists to Study the Super-Rich and Top Wealth Inequality: Insights from Switzerland By Enea Baselgia; Isabel Z. Martínez
  9. Tax revenue data in Africa: the Government Revenue Dataset and African Tax Outlook in comparison By Frankie Mbuyamba; Kyle McNabb

  1. By: Mr. Shafik Hebous; Mr. Alexander D Klemm; Geerten Michielse; Ms. Carolina Osorio Buitron
    Abstract: Tackling income and wealth inequality is at the top of the policy agenda in many countries. This note discusses three approaches of wealth taxation, based on (1) returns with a capital income tax, (2) stocks with a wealth tax, and (3) transfers of wealth through an inheritance (or estate) tax. Taxing actual returns is generally less distortive and more equitable than a wealth tax. Hence, rather than introducing wealth taxes, reform priorities should focus on strengthening the design of capital income taxes (notably capital gains) and closing existing loopholes, while harnessing technological advances in tax administration—including cross-border information sharing—to foster tax compliance. The inheritance tax is important to address the buildup of dynastic wealth.
    Keywords: income inequality; wealth inequality; wealth tax; capital income tax; estate tax; capital gains; tax loopholes; tax administration
    Date: 2024–03–08
  2. By: McDonald, Tia M.; Durst, Ron
    Abstract: Two recent laws enacted temporary provisions to the Federal tax code: the American Rescue Plan Act (ARPA) and the Tax Cuts and Jobs Act (TCJA). The authors of this report assess the impact of these expired and expiring Federal income and estate tax policies on tax liabilities for farm households. The authors estimate that the expiration of the temporary provisions of the ARPA and TCJA would increase farm households’ Federal income tax liabilities by $8.9 billion and estate tax liabilities by $647 million the year following expiration. The change in tax liabilities varies by farm size and for groups of farmers considered underserved by USDA programs. This analysis suggests that the combined effect of the sunsetting of reduced individual income tax rates, the increased standard deduction, a cap on State and local tax deductions, and the elimination of the personal exemptions would have the largest impact on underserved and all other farm households, except for very large farm households identified as those with annual gross cash farm income above $5 million. For these very large farm households, the sunsetting of the qualified business income deduction (QBID) would result in the largest increase in tax liabilities.
    Keywords: Consumer/Household Economics, Financial Economics, Research Methods/ Statistical Methods
    Date: 2024–02
  3. By: Mariona Mas-Montserrat; Céline Colin; Bert Brys
    Abstract: Presumptive tax regimes (also known as simplified tax regimes) intend to reduce tax compliance costs for micro and small businesses (and enforcement costs for the tax administration) while levying a lower tax burden as compared to the standard tax system. This working paper compiles detailed information on the presumptive tax regimes existing in a selection of OECD and non-OECD countries, identifies common practices adopted across the countries examined and provides multiple examples of best practices observed in these regimes. These examples can serve as guidance to policy makers and tax administrations to strengthen particular features of the presumptive tax regimes implemented in their jurisdictions. Lastly, the paper highlights the main challenges generally observed in the presumptive tax regimes under study, which might undermine the role of these regimes in incentivising business formalisation and strengthening tax compliance over time.
    Keywords: micro and small business taxation, presumptive tax regimes, simplified tax regimes, tax policy design
    JEL: H25
    Date: 2024–03–19
  4. By: Odran Bonnet (Insee); Etienne Fize (Institut des Politiques Publiques, Paris School of Economics); Tristan Loisel (Insee, Crest); Lionel Wilner (Insee, Crest)
    Abstract: This paper exploits the introduction of the German carbon tax in 2021 as well as excise tax rebates on fuel in both France and Germany, consecutive to the 2022 oil crisis, to infer how fuel tourism responds to changes in relative prices. Based on French high-frequency transaction-level data issued from individual banking accounts, we find substantial displacement between foreign and domestic consumption. When relative prices increase by 1%, the relative cross-border demand decreases by 7.7%. In border areas, the elasticity of tax revenue with respect to foreign prices is as high as 0.5. Moreover, there is no substantial difference in demand response to either carbon or excise tax. Such empirical evidence illustrates the importance of coordinating tax policy within EU.
    Keywords: Commodity taxation; Tax coordination; Carbon pricing; Fuel tourism; Transaction-level data.
    JEL: H20 H23 H77 R48
    Date: 2024–03–08
  5. By: Bastani, Spencer (IFAU - Institute for Evaluation of Labour Market and Education Policy); Blumkin, Tomer (Department of Economics, Ben Gurion University of the Negev); Micheletto, Luca (Department of Law, University of Milan, and Dondena Centre for Research on Social Dynamics and Public Policy, Bocconi University)
    Abstract: This paper studies optimal taxation of income and education when employers cannot observe workers’ productivity and workers signal their productivity to firms by choosing both quantity and quality of education. We characterize constrained efficient allocations and derive conditions under which there is predistribution, i.e., redistribution through wage compression. Implementation through income and education dependent taxes is discussed, as well as education mandates. A key insight is that achieving predistribution requires complementing the income tax with additional policy instruments that regulate the flow of information in the labor market and prevent high skilled individuals from separating themselves from their low-skilled counterparts.
    Keywords: nonlinear taxation; education; asymmetric information; human capital; predistribution
    JEL: D82 H21 H52 J31
    Date: 2024–03–13
  6. By: Congressional Budget Office
    Abstract: If current laws governing taxes and spending generally remained unchanged, the federal budget deficit would increase significantly in relation to gross domestic product over the next 30 years, CBO projects. That increase would stem from high and rising interest costs and from large primary deficits (that is, deficits excluding net outlays for interest). Growing total deficits would push federal debt held by the public far beyond any previously recorded level. Such large and growing debt would have significant economic and financial consequences.
    JEL: E20 E60 E61 E62 E66 H50 H51 H53 H55 H60 H61 H62 H63 H68
    Date: 2024–03–20
  7. By: Giovanni Carnazza (Università di Roma Tre); Federica Lanterna (University Roma Tre, Department of Economics)
    Abstract: An extensive economic literature has investigated the cyclical behaviour of the budget balance in response to the business cycle. However, little is known about the behaviour of one of its two main components, i.e. tax revenue. We shed new light on this issue by focusing on a panel of 27 EU countries for the period 1995-2022. Using a novel empirical strategy to pre-adjust each revenue item for the business cycle, we study the behaviour of personal income tax, corporate income tax, indirect taxes, social security contributions, and non-tax revenues. Considering different econometric techniques, we find a general and stable pro-cyclical behaviour for all tax items in the EU, except for corporate income tax. This behaviour is then analysed with the varyingcoefficient model, assessing the impact of a novel variable combining the stringency of the European fiscal framework and the debt-to-GDP ratio. Generally, this indicator seems to have intensified the procyclical trend of each revenue item.
    Keywords: Tax policy, Pro-cyclicality, Tax Revenue, Cyclical adjustment, European Union
    JEL: E32 E62 H20
    Date: 2024–03
  8. By: Enea Baselgia; Isabel Z. Martínez
    Abstract: We present a new data set we built based on Swiss rich lists going back to 1989. We show, among other things, that 60% of the super-rich are heirs—a fraction twice as large as in the US—and that wealth mobility at the very top has declined significantly. We find that top 0.01% wealth shares are higher than previous estimates based on wealth tax statistics suggest. At the same time, we argue that rich list data lead to overestimating wealth inequality. While rich lists are valuable to study the super-rich, we recommend to use reported wealth figures with caution.
    Keywords: super-rich, wealth inequality, inheritances, wealth mobility
    JEL: C81 D31 D64 J62
    Date: 2024
  9. By: Frankie Mbuyamba; Kyle McNabb
    Abstract: This paper compares two important sources of tax revenue statistics for African countries, namely the Africa Tax Administration Forum's African Tax Outlook and the United Nations University World Institute for Development Economics Research's Government Revenue Dataset. We consider the background, construction, sources, and user bases of each dataset before comparing the scope and attempting to understand where commonalities and differences lie. The bulk of the paper focuses on a quantitative comparison of ten key variables across the two datasets.
    Keywords: Data, Development, Tax revenue, Revenue, Statistics, Africa
    Date: 2024

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