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on Public Finance |
| By: | James Alm (Tulane University); Rida Belahouaoui (Cadi Ayyad University) |
| Abstract: | This study examines the role of artificial intelligence (AI) tools in enhancing tax fraud detection within the ambit of the OECD Tax Administration 3.0, focusing on how these technologies streamline the detection process through a new "Adaptive AI Tax Oversight" (AATO) framework. Through a textometric systematic review covering the period from 2014 to 2024, we examine the integration of AI in tax fraud detection. The methodology emphasizes the evaluation of AI's predictive, analytical, and procedural benefits in identifying and combating tax fraud. The research underscores AI's significant impact on increasing detection accuracy, predictive capabilities, and operational efficiency in tax administrations. Key findings reveal the ways by which the development and application of the AATO framework improves the tax fraud detection process, and the implications offer a roadmap for global tax authorities to utilize AI in bolstering detection efforts, potentially lowering compliance expenses and improving regulatory frameworks. |
| Keywords: | Artificial intelligence, tax fraud, AATO framework, blockchain, neural networks, data mining |
| JEL: | C45 H26 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2511 |
| By: | James Alm (Tulane University); Yvette Lind (BI Norwegian Business School) |
| Abstract: | It is increasingly recognized that the individual income tax leads to disparate treatment by race, ethnicity, and gender, even when the statutory tax code is written in a race-, ethnicity-, and gender-blind way. Partly in response to these disparate treatments, there have been many suggestions for moving the income tax to more neutral treatments of taxpayers. In this paper, we focus on a specific aspect of these reform efforts: making the individual income tax gender neutral. We first examine the many sources of gender non-neutrality in the income tax. We argue that gender non-neutrality arises largely because of deviations of "income" in the tax code from "comprehensive income, " deviations that are driven by the many things that we want the tax to achieve, by the ways in which the specific features of the income tax interact with the economic decisions and roles of individuals, and by the differences in these decisions and roles between women and men. We illustrate the results of these tax features on gender non-neutrality with several specific examples drawn largely from Scandinavian tax practices. We conclude that it is possible to make the income tax more gender neutral, so that a gender-neutral income tax is feasible. However, we also conclude that complete gender neutrality would come at the expense of other desired goals; that is, complete gender neutrality is at odds with all that we ask of the tax code, including targeting tax benefits at groups like women who have experienced significant historical inequities in their tax treatment, so that a completely gender-neutral income tax is not desirable because we wish to use the income tax to achieve many other worthwhile goals. Safeguards actively promoting the specific circumstances of women may be necessary, as such biased tax features could be used as a way of moving toward more gender-equal outcomes. In light of these arguments, we suggest that one alternative to promoting complete gender neutrality in the tax code could be to consider affirmative action in some circumstances as a way of fostering gender-neutral outcomes, rather than to aim for a gender-neutral tax code with inequitable outcomes induced by societal and cultural influences. Another option that has proven successful elsewhere could be to actively employ gender budgeting assessments when introducing new tax legislation and budgets. |
| Keywords: | Broad-based, low-rate taxation, comprehensive income, Haig Simons standard, optimal taxation, tax reform |
| JEL: | H2 H7 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2508 |
| By: | Jules Linden; Cathal O'Donoghue; Denisa Sologon |
| Abstract: | Carbon taxes are increasingly popular among policymakers but remain politically contentious. A key challenge relates to their distributional impacts; the extent to which tax burdens differ across population groups. As a response, a growing number of studies analyse their distributional impact ex-ante, commonly relying on microsimulation models. However, distributional impact estimates differ across models due to differences in simulated tax designs, assumptions, modelled components, data sources, and outcome metrics. This study comprehensively reviews methodological choices made in constructing microsimulation models designed to simulate the impacts of carbon taxation and discusses how these choices affect the interpretation of results. It conducts a meta-analysis to assess the influence of modelling choices on distributional impact estimates by estimating a probit model on a sample of 217 estimates across 71 countries. The literature review highlights substantial diversity in modelling choices, with no standard practice emerging. The meta-analysis shows that studies modelling carbon taxes on imported emissions are significantly less likely to find regressive results, while indirect emission coverage has ambiguous effects on regressivity, suggesting that a carbon border adjustment mechanism may reduce carbon tax regressivity. Further, we find that estimates using older datasets, using explicit tax progressivity or income inequality measures, and accounting for household behaviour are associated with a lower likelihood of finding regressive estimates, while the inclusion of general equilibrium effects increases this likelihood. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.07713 |
| By: | J. Sebastian Leguizamon (Western Kentucky University); Susane Leguizamon (Western Kentucky University); James Alm (Tulane University) |
| Abstract: | It is increasingly recognized that race interacts in important ways with taxation, including taxation of the family. In this paper, we quantify the racial disparity in the magnitude of the "marriage penalty" or "marriage bonus" in the Earned Income Tax Credit (EITC) using individual micro-level data from the Current Population Survey from 1992 to 2019. We find that among households experiencing a penalty, low-income Black households' is, on average, 22 percent larger than that for low-income white households, even when their family income levels are largely the same. These racial inequities are troubling, given the impact of this program on low-income individuals across the United States. |
| Keywords: | EITC, Marriage, taxable unit, marriage penalty and bonus, race |
| JEL: | H24 J12 J16 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2506 |
| By: | Javier Garcia-Bernardo (Charles University, Utrecht University); Petr Janský (Charles University); Gabriel Zucman (Paris School of Economics, Berkeley) |
| Abstract: | The 2017 Tax Cut and Jobs Act lowered the US corporate tax rate and introduced provisions to curb profit shifting. We combine survey data, tax data, and firm financial statements to study the evolution of the geographical allocation of US firms’ profits after the reform. Between 2017 and 2020, the share of profits booked abroad declined by 1–5 percentage points, in part related to repatriations of intellectual property to the US. However, the share of foreign profits booked in tax havens remained stable at around 50%. While aggregated changes in profit allocation are small, a number of firms responded strongly. |
| Keywords: | Multinational corporation; corporate taxation; profit shifting; effective tax rate; country-by-country reporting; Tax Cuts and Jobs Act |
| JEL: | F23 H25 H26 H32 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:dbp:wpaper:042 |
| By: | Piotr Denderski; Tim Obermeier |
| Abstract: | An enduring source of gender inequality is that some high-paying ("nonlinear") occupations penalize balancing work and household time commitments, as emphasized by Goldin (2014). We ask how household taxation interacts with these occupational differences to shape gender gaps in hours, wages, and occupational choice, and whether these differences materially affect the impact of tax reforms. We address these questions in a structural Roy model of household labor supply with occupation-specific earnings-hours nonlinearities and progressive taxation, calibrated to US data. We find that a balanced-budget switch to separately filed progressive taxes significantly reduces the gender gaps in hours and occupational choice, while the wage gap declines more modestly. These improvements arise because the reform lowers marginal tax rates for secondary earners and raises them for primary earners. By contrast, proportional taxation yields much smaller reductions in gender gaps. In both reforms, the standard labor-supply channel accounts for roughly two-thirds of the overall taxable- income response, while the convex earnings-hours relationship amplifies these effects and explains most of the remainder. Occupational switching contributes little because those who do switch are negatively selected. |
| Keywords: | household taxation, nonlinear occupations, occupational choice, gender inequality |
| Date: | 2026–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2140 |
| By: | Eichfelder, Sebastian; Hundsdoerfer, Jochen; Kaltenhäuser, Martin; Noack, Mona |
| Abstract: | We provide evidence that the capitalization of taxes in share prices depends on investor attention and can create additional implicit taxes for inattentive investors. Interpreting a German capital gains tax reform as a natural experiment, we identify investor attention by the temporal distance to the deadline (deadline effect) and media coverage (media effect). Although the reform was announced 18 months in advance, we find evidence for large abnormal returns around the deadline. In the two days preceding it, daily returns (share prices, trading volumes) of treated stocks increased abnormally by 2.5 pp (7.0%, 296.7%). The cumulative abnormal return CAR one day before the deadline was 10.7%. The media coverage also abnormally increased returns and trading activity. In the last months of 2008, 20 additional articles per week on the reform resulted in a CAR of about 2% in one week. Inattentive investors paid abnormally high prices in periods of high attention, implying an implicit tax burden of up to 67.9% of realized and 130.5% of expected returns one day before the deadline. |
| Keywords: | Implicit taxes, information dissemination, investor attention, announcement effect, deadline effect, tax capitalization |
| JEL: | G12 G14 H24 M40 M48 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:335023 |
| By: | J. Sebastian Leguizamon (Western Kentucky University); Susane Leguizamon (Western Kentucky University); James Alm (Tulane University) |
| Abstract: | In this paper, we quantify the ways by which gender, race, and earnings differentials affect the magnitude of the "marriage penalty" or "marriage bonus" in the Earned Income Tax Credit (EITC) using individual micro-level data from the Current Population Survey from 2010 to 2018. Our results show that on average Black couples experience a larger EITC marriage penalty (or a smaller EITC marriage bonus) than white couples. This differential is due mainly to gender differences across race in household income splits, in dependents, and in earnings levels. It is neither surprising nor accidental that these three factors are also the main determinants of the EITC benefit itself. |
| Keywords: | EITC, Marriage, taxable unit, marriage penalty and bonus, race |
| JEL: | H24 J12 J16 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:tul:wpaper:2507 |
| By: | Eichfelder, Sebastian; Nguyen, Hang T. T. |
| Abstract: | This study examines the interplay between corporate tax avoidance and the incidence of the corporate income tax falling on wages and employment. Using the German Business Tax Reform 2008 (GBTR 2008) as a natural experiment, we investigate how a large tax cut of about nine percentage points affected wages and the number of employees of low-avoidance firms compared with high-avoidance firms. We expect an abnormal wage response of low-avoidance firms that are more burdened by corporate taxation and benefitted more from the tax cut. In difference-in-differences and triple-difference regressions, we do not find significant evidence for an abnormal wage response of low-avoidance firms. A potential explanation might be strong labour protection regulations in Germany that might limit the ability of German firms to shift corporate taxes on labour. We find some but not very robust evidence for an abnormal increase in employment of low-avoidance firms after the GBTR 2008. Our findings align with recent evidence that German employees bear only a small fraction of German corporate taxation and that this burden primarily falls on employees of very small firms that are only poorly represented in our Amadeus data. |
| Keywords: | Tax Incidence, Corporate Income Tax, Tax Avoidance, Employment Effects, Wage Effects |
| JEL: | E24 H22 H25 J30 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:335021 |
| By: | Christl, Michael; Berdeal, Silvia Navarro |
| Abstract: | This paper assesses the fiscal and distributional effects of personal income tax expenditures in Portugal using EUROMOD and 2022 EU-SILC microdata. We compare the 2023 tax-benefit system with a counterfactual scenario in which tax expenditures are removed to estimate first-round impacts. We find that tax expenditures account for almost 40% of personal income tax revenues and predominantly benefit middle- and higher-income households, with large variation in redistributive effectiveness across instruments. While the Net Minimum Income Guarantee is progressive and cost-efficient in reducing inequality, most work- and pensionrelated allowances deliver limited equity gains, suggesting scope for reform. |
| Keywords: | Tax expenditures, EUROMOD, Income redistribution, Microsimulation, Fiscal policy, Cost-efficiency |
| JEL: | H24 H22 I38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1705 |
| By: | Holtmann, Svea; Braun, Anna-Sophie; Cho, Jae; Koch, Reinald; Langenmayr, Dominika |
| Abstract: | We study a 2018 reform in South Korea that reduced tax credits for automation investments. This reform increased the tax cost of investing in robots and thus resembles a robot tax. Exploiting this natural experiment with industry-level data on robot installations and firm-level data from Orbis, we document a sharp decline in automation investments after the reform in industries with a large share of affected firms. At the firm level, we find that affected firms increased employment, consistent with the notion that robots replaced workers. The effects are heterogeneous: financially constrained firms cut investment overall, while unconstrained firms substituted away from robots, hired more workers, and reallocated resources toward more productive uses. For the latter group, we find improvements in various measures of investment quality, suggesting that the tax credit induced inefficient overinvestment in automation. Our evidence informs ongoing debates on robot taxation and the efficiency of tax incentives. |
| Keywords: | tax credits, automation, robot tax |
| JEL: | H25 H32 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:335022 |