Public Economics http://lists.repec.org/mailman/listinfo/nep-pbe Public Economics 2026-05-25 CASH REDUX, CREDIT CARD SURCHARGES, AND THE TAX GAP https://d.repec.org/n?u=RePEc:tul:wpaper:2607&r=&r=pbe “Cash is king” is a long-standing mantra among many businesspeople. It has a less favorable aura in the tax compliance world, where cash is often used to circumvent one’s tax reporting obligations. This analysis explores the current role of cash in today’s economy and suggests reasons why Congress should curtail its use or, at the very least, promote other forms of payment. Jay A. Soled James Alm Tax compliance; tax gap; credit cards; cash; cryptocurrencies; third-party information; nudges 2026-05 Behavioral Factors in Tax Preparer and Tax Compliance Choices https://d.repec.org/n?u=RePEc:tul:wpaper:2606&r=&r=pbe What tax preparer characteristics are most important to taxpayers in their decision to use a tax preparer, and how does this choice of a tax preparer affect subsequent taxpayer compliance? We use laboratory experiments to examine these questions. We find that individuals in this environment simultaneously choose a preparer and their compliance based in part on factors predicted by the standard expected utility theory of individual behavior under uncertainty. However, we find that factors based on psychological considerations –- which we refer to as “behavioral factors” -– also play an important role in this setting: participants prefer tax preparers who are “credentialed, ” even when the cost is high or the credential has no impact on outcomes; participants fear an audit, regardless of its likelihood; participants often choose high-cost preparers even when they are fully compliant; and many participants forego substantial expected earnings rather than underreport income. James Alm Jubo Yan William D. Schulze Melissa Vigil Carrie von Bose tax compliance; tax preparer; experimental economics; expected utility theory; behavioral economics 2026-05 Estimating the Present Value of R&D Tax Benefits in the United States https://d.repec.org/n?u=RePEc:nbr:nberwo:35208&r=&r=pbe Using a panel of confidential corporate tax returns, we provide the first direct estimates of the realized present value of corporate tax benefits from R&D credits and deductions in the United States. Realized tax benefits can deviate from statutory tax benefits because firms in loss status are typically unable to fully utilize credits and deductions to offset current-year taxes and instead must carry these attributes forward. We develop a novel procedure to track the intertemporal firm-level utilization of tax attributes generated by corporate R&D spending, and find that the present value of R&D tax benefits varies substantially with firms’ loss status, age, and size. Old and large firms typically use R&D tax benefits quickly, while young firms – especially those that are small – frequently operate in loss status and use tax attributes more slowly. From 2012–2016, the average firm generated $0.41 in statutory tax benefits per dollar of R&D investment, with a realized present value of $0.36. Young and small firms in a loss position realized only $0.23 per dollar, a 44% decrease relative to the statutory benchmark. Brandon Pecoraro Nicholas C. Hoffman Martin Lopez-Daneri Elena C. Derby Rachel Moore Shannon E. Sledz 2026-05 Understanding Tax Evasion: Knowns, Unknowns, and a Way Forward https://d.repec.org/n?u=RePEc:tul:wpaper:2604&r=&r=pbe In this paper I examine what we have learned about tax evasion, or what might be termed the “knowns” that summarize our increased understanding of tax evasion. I also examine the many “unknowns” that remain unanswered, as well as the many “unknowns” that have newly arisen as technologies have changed. I finish with suggestions about how these “unknowns” might be examined in a new research agenda that builds upon what we have learned but that utilizes new tools that are emerging as our understanding expands. James Alm tax evasion, enforcement, social norms, trust, simplification, technology 2026-05 Progressiveness Assessment of the Value Added Tax in Russia https://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2025-1509&r=&r=pbe The issue of tax burden distribution among the population is frequently discussed in Russia. In particular, some authors argue that the VAT burden is regressive and advocate for expanding the list of goods subject to the reduced VAT rate. However, most of these studies focus on comparing aggregate consumption and disposable income as tax bases. This paper, by contrast, concentrates on identifying which categories of expenditure in Russia are subject to progressive or regressive VAT treatment, as such estimates can inform proposals for specific tax design reforms. To analyse the structure of VAT burden distribution, data from the Russian Longitudinal Monitoring Survey (RLMS), conducted by the Higher School of Economics, is employed. Total consumption expenditure is divided into the following categories: current consumption, expenditure on durable goods, investments in human capital, and spending on entertainment and leisure. Based on the distributional analysis, it is found that the structure of household consumption remained stable over the period from 2007 to 2019. During periods of declining income, a decrease in the progressivity of the VAT scale is observed. This is due to higher-income groups reducing their expenditure on durable goods in favour of current consumption and investments in human capital – both of which are often subject to zero or reduced VAT rates. Among all categories, only investments in human capital display a regressive VAT burden distribution. VAT design proves to be progressive for spending on leisure and entertainment, primarily due to the inclusion of expenditure on tourist trips, which are subject to the standard VAT rate. Sergey Belev Konstantin Vekerle Sergey Sinelnikov Russian economy, tax burden, VAT, distributional analysis, disposable income, consumption expenses, investments in human capital 2025 On the Complementarity of Public and Private Pensions: Equity, Efficiency, and Optimal Design https://d.repec.org/n?u=RePEc:een:camaaa:2026-34&r=&r=pbe This paper studies whether shifting retirement financing from public to mandatory private pensions can deliver Pareto improvements across generations when the implicit return on public pensions is persistently below the market return on capital. We develop a dynamic general equilibrium overlapping-generations model with heterogeneous households facing idiosyncratic earnings risk, endogenous labor supply and retirement, and a mixed public–private pension system. Calibrated to Australia -- where strict means testing creates strong complementarity between public and private pensions -- the model shows that higher private contributions raise aggregate wealth and future welfare but impose transitional welfare costs on current workers. The optimal contribution rate is around 14 percent of gross wages, yielding efficiency gains of 0.23 percent of lifetime consumption through reduced public pension eligibility and lower distortionary taxation. When combined with compensating transfers, the reform delivers a Pareto improvement across generations. In contrast, in systems with weaker or no means testing -- such as pension designs comparable to those in the Netherlands and the United States -- these gains diminish or turn negative, indicating that the linkage between private wealth and public pension entitlements is central to the scope for Pareto-improving reform. George Kudrna Chung Tran social security, private pension, income taxation, labor supply, efficiency, life-cycle, stochastic OLG model 2026-05 Bank Capital and the Minimum Corporate Tax https://d.repec.org/n?u=RePEc:fau:wpaper:wp2026_09&r=&r=pbe This paper examines whether the Pillar Two Global Minimum Tax reduces bank profitability and regulatory capital, and for which banks the effects are strongest. We use a quarterly exposure-based differencein differences design around 2024Q1, where treatment intensity is defined by pre-2024 low-tax exposure among in-scope banks. The analysis uses a quarterly bank-level panel for 2014-2024 and exploits predetermined cross-sectional heterogeneity in low-tax exposure while controlling for bank and quarter fixed effects. The headline estimates show that post-2024 profitability and capital buffers decline more for high-exposure banks: profit after tax falls by about 2.2 basis points of assets per quarter and Tier 1 buffers by about 0.09 percentage points in the baseline specification. Higher low-tax exposure is not interpreted as vulnerability per se. The downside channel is concentrated where high pre-reform low-tax exposure coincides with limited initial capital headroom: event-study, placebo, matched-sample, and split-sample evidence all point to larger post-2024 capital-buffer compression for thin-buffer banks. Overall, the results indicate modest average effects but meaningful tail risk for banks that combine high minimum-tax exposure with thin initial capital buffers. Alessandro Chiari Firm Behaviour, International Banking, Tax Havens, Country-by-Country Reporting 2026-05 Fiscal Policy and Transition Risk https://d.repec.org/n?u=RePEc:ces:ceswps:_12670&r=&r=pbe We study how climate policy can interact with distortionary fiscal policy and potentially lead to transition risk. Using an environmental dynamic stochastic general equilibrium model that features financial frictions and preexisting labor and capital taxes, we simulate a carbon tax and an abatement subsidy under different scenarios for returning carbon tax revenue or financing the subsidy. We find novel policy implications and important differences between the carbon tax and the subsidy. Under both policies, transition dynamics can differ sharply from long-run outcomes. For the carbon tax, transition dynamics depend on both financial frictions and the choice of revenue recycling. For the abatement subsidy, distortionary financing can generate contractionary transition dynamics, because of financial frictions. Macroprudential policy can mitigate transition risk under the carbon tax but has little effect under the subsidy. Stefano Carattini Garth Heutel Givi Melkadze Inès Mourelon tax interaction, double dividend, transition risk, financial frictions, climate policy, macroprudential policy 2026 Pension Reforms, Longevity, and Late-Life Employment: Evidence from Sixteen Countries https://d.repec.org/n?u=RePEc:cnn:wpaper:26-006e&r=&r=pbe Employment rates for workers aged 55–64 increased by an average of 28.5 percentage points across sixteen countries between 2004 and 2019, with Austria, Italy, and the Netherlands experiencing increases larger than their entire 2004 employment rate. We examine what explains these dramatic gains and their substantial heterogeneity across countries and demographic groups. Using harmonized Health and Retirement Study data, we document three key empirical patterns. First, employment increases concentrated among women, healthier individuals, and more educated workers. Second, contrary to prior research, changes in weekly hours per worker are mixed rather than uniformly negative, with gains occurring primarily at the extensive margin. Third, employment growth accelerated during 2013–2019 compared to 2007–2013. While existing research examines longevity and pension reforms as separate channels, we show their interaction is quantitatively important. Longevity improvements amplify pension reform effects: when survival probabilities increase, actuarial adjustments for delayed claiming provide higher benefits collected over longer periods, strengthening work incentives. We formalize this mechanism in a lifecycle framework yielding testable predictions about margins of adjustment and demographic heterogeneity. Countries experiencing both pension reforms and substantial longevity gains show employment increases 15–20 percentage points larger than countries with reforms alone. This interaction helps explain why responses were exceptionally large in some countries, why growth accelerated after 2013, and why effects concentrate among healthier and more educated workers. Our findings suggest pension reform effectiveness depends critically on demographic context. Because effects concentrate at the extensive margin, policies raising retirement ages are more effective than hours flexibility policies. Selahattin Imrohoroglu Zhixiu Yu 2026-04 Economic Analysis of Multi-Tier Conditional Universal Basic Income System --A Comprehensive Theoretical Study of the Five-Core-Rule Framework https://d.repec.org/n?u=RePEc:pra:mprapa:128942&r=&r=pbe This paper conducts a systematic economic analysis of a Multi-Tier Conditional Universal Basic Income (MTC-UBI) system comprising five core rules. Rule 1 excludes persons working 0 or 7 days per week, and those aged ≤18 or ≥60 from receiving UBI. Rule 2 excludes the top three workday categories among workers with 1 to 6 working days per week. Rule 3 mandates that monthly UBI shall not exceed one-third of the local minimum living guarantee (dibao). Rule 4 requires annual declaration of working days. Rule 5 establishes that non-declaration results in default 1 Wu, Chang-Min Universal Basic Income, Five-Rule Framework, One-Third of Minimum Living Guarantee, Default 5-Day Registration, Self-Enforcement Mechanism 2026-04-29