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on Public Economics |
| By: | Javier Garcia-Bernardo (1Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia; Department of Methodology & Statistics, Utrecht University, the Netherlands; Centre for Complex Systems Studies, Utrecht University, the Netherlands); Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | We exploit the new country-by-country reporting data of multinational corporations, with unparalleled country coverage, to reveal the distributional consequences of profit shifting. We estimate that multinational corporations worldwide shifted over $850 billion in profits in 2017, primarily to countries with effective tax rates below 10%. Countries with lower incomes lose a larger share of their total tax revenue due to profit shifting. We further show that a logarithmic function is better suited for capturing the non-linear relationship between profits and tax rates than linear or quadratic functions. Our findings highlight effective tax rates’ importance for profit shifting and tax reforms. |
| Keywords: | multinational corporation, corporate taxation, profit shifting, effective tax rate, country-by-country reporting, global development |
| JEL: | F23 H25 H26 H32 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2023_33&r=pbe |
| By: | Samuel Bryson; Kwabena Adu-Ababio; Evaristo Mwale; John Rand |
| Abstract: | We investigate the behavioural responses of individual taxpayers to changes in marginal personal income tax rates applying empirical bunching methodology to tax administrative data from Zambia over the period from 2014 to 2021. We find evidence for excess bunching at the first kink in the tax schedule for all years but less evidence of bunching at the second and third thresholds. While bunching is considerable and behavioural responses are observed to changes in the location of the kinks over time, bunching at reference points ('round-number bunching') also appears large. |
| Keywords: | Personal income tax, Zambia, Income distribution, Tax data |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2023-142&r=pbe |
| By: | Arpad Abraham; Pavel Brendler; Eva Carceles |
| Abstract: | One important feature of capital tax reforms is uncertainty regarding their duration. We use the Bush Tax cuts as the leading example to illustrate how uncertainty about reform duration may affect the economy’s path and erode political support for the reform. We model policy uncertainty by assuming that the reform may be either repealed or made permanent with some probability at a predetermined date. We show that policy uncertainty is a critical ingredient that can explain why the Bush tax cuts had no economically significant effect on investment, as confirmed empirically by Yagan (2015). While the permanent reform leads to positive aggregate welfare gains on impact, policy uncertainty may reverse this result. These observations hold both in a model with a representative firm and heterogeneous firms, but adding firm heterogeneity generates an interesting implication. In contrast to the permanent reform, policy uncertainty increases the TPF since it dampens investment by mature, less productive firms. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:nys:sunysb:23-01&r=pbe |
| By: | Kerim Can Kavakli; Giovanna Marcolongo; Diego Zambiasi |
| Abstract: | We analyze the enforcement of financial sanctions and the role of offshore secrecy jurisdictions (‘tax havens’) in it. Tax havens can undermine sanctions and provide a safe refuge for targeted actors by hiding information on asset ownership. Consequently, we hypothesize that targets of financial sanctions will increase their funds in tax havens. We test this hypothesis using data from the Bank of International Settlements and the Offshore Leaks Database and find strong support for it. Additionally, neither participation in sanctioning coalitions nor membership in relevant intergovernmental organizations prevent tax havens from attracting target state funds. However, when the US leads (not only joins) a sanction coalition, then this effect disappears. Our findings suggest that targeted actors use tax havens to evade sanctions, but such evasion can be prevented when the US prioritizes enforcement. More broadly, our paper highlights a novel and geostrategically important role of tax havens in global finance. |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp23212&r=pbe |
| By: | Black, B.; French, E.; McCauley, J.; Song, J. |
| Abstract: | This paper estimates the effect of Disability Insurance and Supplemental Security Income receipt on mortality for individuals on the margin of being allowed versus denied benefits. Exploiting the random assignment of administrative law judges to disability insurance cases, we find that benefit allowance increases 10-year mortality rates by 2.8 percentage points for marginal beneficiaries. However, using a Marginal Treatment Effects approach, we and evidence that benefit receipt reduces mortality for inframarginal beneficiaries, who are typically less healthy than marginal beneficiaries. Furthermore, we find suggestive evidence that allowance reduces mortality among those with expensive health conditions such as cancer. |
| Keywords: | Disability, Benefits, Mortality |
| JEL: | H51 H55 I12 I13 J14 J22 |
| Date: | 2023–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2375&r=pbe |
| By: | Hecht, Katharina; Savage, Mike; Summers, Kate |
| Keywords: | perceptions of inequality; qualitative research; wealth; wealth taxation; DFG – German Research Foundation) under Germany’s Excellence Strategy – EXC-2035/1 – 390681379 |
| JEL: | F3 G3 |
| Date: | 2022–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120793&r=pbe |
| By: | Redonda, Agustin; Von Haldenwang, Christian; Berg, Sofia |
| Abstract: | Tax expenditures are deviations from the benchmark tax system which provides preferential tax treatment. Governments use them to pursue different policy goals, such as boosting innovation, creating employment or greening the economy. Their fiscal cost can be significant since the global average revenue forgone, estimated at around 4% of GDP and 25% of tax revenue, has remained stable over the last 30 years. Evaluating tax expenditures against their stated policy objectives and the potential side effects or externalities they might trigger is a crucial step for the rationalization of tax expenditures, with implications for domestic resource mobilization and the alignment of tax policies with growth and development strategies. This report analyses tax expenditure evaluation as a key element of the tax expenditure policy cycle and highlights the need for integrated frameworks that link ex-ante assessments with ex-post evaluations. It also provides an international overview of the state of tax expenditure evaluations, showing that it remains relatively underdeveloped, not only in Latin America and the Caribbean, but also across the world. |
| Date: | 2023–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col022:68667&r=pbe |
| By: | Fleiter, Jannik (RWTH Aachen university); Atasoy, Ayse Tugba (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)) |
| Abstract: | In this paper, we examine the significance of compliance costs in the context of solar photovoltaics deployment and installed capacity decisions by private households in Germany. We investigate possible adverse effects of feed-in remuneration schemes induced by tax compliance costs. More specifically, we study how private households respond to a tax policy instruction issued by the German Federal Ministry of Finance in June 2021, which enables to avoid the tax compliance obligations if the installed capacity does not exceed 10 kWp. A decision model and two different empirical models are employed to show how such compliance costs may distort both deployment decisions and capacity choices. We find that the tax instruction led to a change in the capacity distribution of newly built PV systems towards 50-65% intensified excess bunching slightly below 10 kWp, leading to inefficient use of rooftop space. Lack of crosssectional variation in the data and a large number of confounding events in the observation period calls for further research to corroborate our findings. |
| Keywords: | Feed-in tariff; Prosumer household; Solar photovoltaics; Compliance cost; Attribute-based regulation; Bunching; Regression discontinuity (in time) approach; |
| JEL: | C14 D12 O33 Q42 Q48 |
| Date: | 2023–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:fcnwpa:2023_008&r=pbe |
| By: | Clément Anne; Cyril Chalendard; Ana Fernandes; Bob Rijkers; Vincent Vicard |
| Abstract: | To identify transactions at risk of tariff evasion, this paper matches export transaction data from France with import transaction data from Madagascar using container identifiers. Reporting discrepancies between exporters and importers are prevalent but small, with over two-fifths of importers reporting in a way that increases their tariff liability. Yet, aggregate tariff revenues are 24 percent lower due to discrepancies. These revenue losses are highly concentrated: the top five evaders account for three-quarters of all tariff revenue losses and larger shipments are more at risk of evasion. Tariff enforcement in Madagascar is ineffective and only marginally mitigates revenue losses. |
| Keywords: | Tax Evasion;Mirror Statistics;Trade;Corruption;Exporters;Importers;Tariffs |
| JEL: | F14 H26 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2023-22&r=pbe |
| By: | Oscar Claveria (AQR-IREA, University of Barcelona); Petar Soric (University of Zagreb) |
| Abstract: | This paper investigates the adjustment of government redistributive policies in Scandinavian countries following changes in income inequality over the period 1980-2021. We use two complementary measures of inequality: the share of total income accruing to top percentile income holders, as well as the ratio of the share of total income accruing to top decile income holders divided by that accumulated by the bottom 50%. We find that the sign of the relationship between inequality and redistribution is mostly positive and time-varying. We also find significant evidence that redistributive measures in the form of taxes and government transfers adjust more rapidly in an upward than a downward direction, with the exception of Norway. We obtain a significant long-run relationship between both variables in Iceland and Sweden, while in Norway it just holds for the short run. |
| Keywords: | Income inequality, Redistributive policy, Taxes, Government transfers JEL classification: C50, D30, E62, H50 |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:202306&r=pbe |