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on Public Economics |
| By: | Mathieu Lefebvre (University of Liège, CREPP, 7 boulevard du rectorat (B31), Liège 4000, Belgium); Pierre Pestieau (University of Liège, CREPP, 7 boulevard du rectorat (B31), Liège 4000, Belgium ; CORE, University of Louvain, CEPR and PSE); Arno Riedl (School of Economics and Business, Maastricht University, P.O. Box 616, NL-6200 Maastricht, The Netherlands; CESifo Munich, Germany; IZA, Bonn, Germany); Marie-Claire Villeval (Université de Lyon, Lyon, F-69003, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France) |
| Abstract: | In a series of experiments conducted in Belgium (Wallonia and Flanders), France and the Netherlands, we compare behavior regarding tax evasion and welfare dodging, with and without information about others’ behavior. Subjects have to decide between a "registered" income, the realization of which will be known to the tax authority for sure, and an "unregistered" income that will only be known with some probability. This unregistered income comes from self-employment in the Tax treatment and from black labor supplementing some unemployment compensation in the Welfare treatment. Subjects have then to decide on wether reporting their income or not, knowing the risk od detection. The results show that (i) individuals evade more in the Welfare treatment than in the Tax treatment ; (ii) many subjects choose and option that allows for tax evasion or welfare fraud but report their income honestly anyway ; (iii) examples of low compliance tend to increase tax evasion while examples of high compliance exert no influence ; (iv) tax evasion is more frequent in France and the Netherlands ; Wallons evade taxes less than Flemish. There is no cross-country difference in welfare dodging. |
| Keywords: | tax evasion, social fraud, social comparisons,cross-country comparisons, experiments |
| JEL: | H26 H31 I38 C91 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1116&r=pbe |
| By: | James Alm (Department of Economics, Tulane University); Sally Wallace (Department of Economics, Andrew Young School of Policy Studies, Georgia State University) |
| Abstract: | This paper examines the effects of the Tax Reform Act of 1986 on the reporting decisions of taxpayers, using microlevel information from the 1984 and 1989 Statistics of Income. We find that tax reform clearly mattered in the reporting decisions of individuals, with reporting elasticities that cluster between 0.3 and 0.7. However, our results also indicate that individuals' estimated responses vary in different ways for individuals with different income levels, in ways that differ by the types of incomes received by taxpayers, in ways that are sensitive to the estimation approach, and in ways that depend upon data adjustment methods. |
| Keywords: | Tax Reform Act of 1986, income reporting, taxable income elasticity, quantile regression |
| JEL: | H24 H31 H3 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1109&r=pbe |
| By: | Dharmapala, Dhammika; Riedel, Nadine |
| Abstract: | This paper presents a new approach to estimating the existence and magnitude of taxmotivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low-tax and high-tax multinational subsidiaries. This approach is implemented using a large panel of European multinational affiliates over the period 1995-2005. The central result is that parents' positive earnings shocks are associated with a significantly positive increase in pretax profits at low-tax affiliates, relative to the effect on the pretax profits of high-tax affiliates. The result is robust to controlling for various other differences between low-tax and high-tax affiliates and for country-pair-year fixed effects. Additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates. The magnitude of income shifting estimated using this approach is substantial, but somewhat smaller than that found in the previous literature. -- |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fziddp:242011&r=pbe |
| By: | Flannery, Darragh (University of Limerick); O'Donoghue, Cathal (Teagasc Rural Economy Research Centre) |
| Abstract: | In this paper we utilise microsimulation techniques in the form of an income generation model and a tax/benefit model to estimate both the fiscal and net private return to education at a marginal level. This is carried out empirically using Irish data across the period 1987-2005 and is the first study to utilise these techniques in such a manner. The results indicate that a more generous tax/benefit system, combined with a greater state burden of the cost of education over this period may have helped increase the individual’s return to education, while reducing the state return from investing in education. The methodology employed allows us to specifically analyse the impact of various components of the tax/benefit system upon these returns across time and show the role of income tax changes upon the return to education for the individual and the state. |
| Keywords: | returns to education, microsimulation, income generation model |
| JEL: | I22 I28 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5627&r=pbe |
| By: | James Alm (Department of Economics, Tulane University); Janet Rogers (Department of Planning Section, Nevada Department of Administration Division of Budget & Planning) |
| Abstract: | What factors influence state economic growth? This paper uses annual state (and local) data for the years 1947 to 1997 for the 48 contiguous states to estimate the effects of a large number of factors, including taxation and expenditure policies, on state economic growth. A special feature of the empirical work is the use of orthogonal distance regression (ODR) to deal with the likely presence of measurement error in many of the variables. The results indicate that the correlation between state (and state and local) taxation policies is often statistically significant but also quite sensitive to the specific regressor set and time period; in contrast, the effects of expenditure policies are much more consistent. Of some interest, there is moderately strong evidence that a state's political orientation has consistent and measurable effects on economic growth; perhaps surprisingly, a more "conservative" political orientation is associated with lower rates of economic growth. Finally, correction for measurement error is essential in estimating the growth impacts of policies. Indeed, when measurement error is considered via ODR estimation, the estimation results do not support conditional convergence in state per capita income. |
| Keywords: | fiscal policies, regional economic growth, orthogonal distance regression |
| JEL: | H2 H7 O1 O4 R1 R5 |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1107&r=pbe |