|
on Public Economics |
| By: | James Alm (Tulane University) |
| Abstract: | By many accounts, income and wealth inequality has grown significantly in many countries in recent years, violating many peoples standards of "distributive" tax justice. How can tax policies serve as a tool to promote distributive tax justice? There is no shortage of policies that have been suggested, but many have little prospect of implementation. The purpose of this study is to discuss several policies that research has shown are both feasible and effective in achieving distributive tax justice, focusing on specific tax reforms that apply to the United States but that also apply in some form to most other countries around the world. If implemented, these policies would increase the taxes paid by the rich, reduce tax evasion by the rich, and decrease the tax burdens by the gender, race, and ethnicity of taxpayers, all of which would lead to a fairer tax system. Unlike many other suggested reform policies, these policies all work through existing taxes, they are all administratively feasible and effective, none of these policies raises statutory marginal tax rates, these policies are all broadly consistent with the standard "Broad Base, Low Rate" approach to tax reform, and variants of all of these policies apply world-wide. |
| Keywords: | dstributive tax justice, inequality, tax reform, tax compliance, unit of taxation |
| JEL: | H20 H24 H26 D10 D63 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2403&r=pbe |
| By: | Wozny, Florian (German Aerospace Center DLR) |
| Abstract: | The tax incidence is central to the effectiveness of taxation. In this paper, I examine the pass-through rate of an air passenger tax to airfares. Additionally, I analyse its impact on passenger numbers, air transport capacity, and the interaction with supply and demand elasticity. For identification, I exploit the implementation of an air passenger tax on worldwide departures from Sweden and compare them with similar departures from Denmark and Finland with no such air passenger tax implementation. For the analysis, I use a unique data set of the universe of worldwide airline bookings. On average, airlines choose an immediate and nearly full pass-through of taxes. Consistent with theoretical priors for oligopolistic markets, tax incidence increases with competition but decreases with lower demand elasticity. Furthermore, the air passenger tax reduces passenger numbers and air transport capacity significantly. |
| Keywords: | tax incidence, competition, air passenger tax, environmental policy |
| JEL: | H22 L13 Q52 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16783&r=pbe |
| By: | Andreas Gerster; Michael Kramm |
| Abstract: | This paper explores how a benevolent policy maker should optimally tax (or subsidize) product attributes when consumers are behaviorally biased. We demonstrate that market choices are informative about biases, which can be exploited for targeting biased consumers via a non-linear tax schedule. We show that its properties depend on few parameters of the joint distribution of consumer valuations and biases. Furthermore, we provide a novel justification for behaviorally motivated product standards and derive when a combination of taxes and standards is optimal. We illustrate our findings based on a numerical example from the lightbulb market. |
| Keywords: | Optimal commodity taxation, non-linear taxation, internalities, behavioral economics, public economics, environmental economics |
| JEL: | H21 D82 D04 Q58 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2024_510&r=pbe |
| By: | Joshua Aslett; Gustavo González; Stuart Hamilton; Miguel Pecho |
| Abstract: | This technical note introduces analytics for compliance risk management in tax administration. Together with its accompanying toolkit, the note is intended as a starter kit to support capacity development in compliance planning, risk, and intelligence groups. Developed primarily for emerging analysts new to tax administration, the note presents both theory and practical aspects of analytics. Its toolkit is comprised of an initial collection of analytics templates designed to assist in turning the theory presented into practice in the areas of: (1) compliance planning; (2) taxpayer profiling; and (3) audit case selection. |
| Keywords: | tax administration; compliance risk management; compliance strategy; risk analysis; intelligence; data; analytics; digitalization; information technology; analytics support compliance risk management; support CRM analytics capability; CRM theory; IMF Library; data quality; Tax administration core functions; Machine learning; Value-added tax |
| Date: | 2024–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imftnm:2024/001&r=pbe |
| By: | James Alm (Tulane University) |
| Abstract: | Ensuring compliance with the tax laws is an enduring challenge for all governments, and government strategies are constantly evolving as circumstances change. Recently, countries around the world have experienced some major shocks, shocks that are already affecting tax compliance and the policies that governments utilize to maintain compliance. In this paper I examine the effects of two especially important shocks -- technological shocks and SARS-CoV-2 pandemic shocks -- on tax compliance in the years ahead. I argue first that many of these changes in technology will improve the ability of governments to improve tax compliance, mainly by increasing the flow of information to governments, while at the same time opening up new avenues by which some individuals and some firms can evade (and avoid) taxes. I then argue that the pandemic and the associated policies enacted by governments will affect compliance in uncertain ways, in large part because of the conflicting effects of the pandemic and government policies on trust in government. At this point it is unclear which of these trends will dominate, so that the effects of technology and the pandemic on the overall level of tax compliance in a post-pandemic world are uncertain. Even so, I believe that the distributional effects of these shocks are more predictable. Indeed, I argue that these two shocks -- especially the technological shocks -- seem virtually certain to increase economic inequality, regardless of their actual impacts on the level of tax compliance. The challenge facing governments is devising policies to counter these trends. |
| Keywords: | Tax compliance, technology, digitalization, trust, inequality, technology |
| JEL: | H26 H22 D63 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2404&r=pbe |
| By: | Grown, Caren; Mascagni, Giulia |
| Abstract: | The subject of gender and taxation has gained increasing traction in policy circles. Most existing evidence is based on the implicit and explicit bias framework developed in the mid-1990s. This framework has been useful in promoting research in this area, and tax reform to address gender biases. However, as explicit biases become increasingly rare, we argue that the framework is no longer fit for guiding policy towards improved tax equity and gender equality. Most importantly, the ‘tax-bias’ framing creates the impression that the solution to rectifying the underlying problem lies in reforming the tax system. We propose an alternative approach that starts with a clear focus on the policy goal of gender equality, from the perspective of a broader feminist fiscal policy agenda. It also backs a progressive tax policy and administrative reform agenda that generates sufficient revenue to fund policies for gender equality, while also pursuing tax equity. |
| Keywords: | Finance, Gender, |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:18262&r=pbe |
| By: | Chiara Canta (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Helmuth Cremer (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Firouz Gahvari (UIUC - University of Illinois at Urbana-Champaign [Urbana] - University of Illinois System) |
| Abstract: | We study optimal income taxation in a two-group framework where the private cost of misreporting income is positively correlated with productivity. We show that, if high-wage types always reveal their income truthfully, letting low-wage types cheat would lead to Pareto-superior outcomes regardless of the audit costs (as compared to deterring them). When there is no cheating, redistribution takes place on first- or second-best frontiers with the low-wage types always ending up worse off than the high-wage types. Letting low-wage types conceal their income reduces the need to recourse to second-best mechanisms for redistribution. Additionally, it increases the reach of first-best redistribution to outcomes at which low-wage types are better off than high-wage types. |
| Keywords: | Optimal taxation, tax evasion, audits, welfare-improving |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04457538&r=pbe |
| By: | Jara, H. Xavier; Palacio Ludeña, María Gabriela |
| Abstract: | In the face of increased uncertainty and a slow economic recovery, it is crucial to protect populations from the effects of systemic crises beyond the narrow goal of poverty reduction. In Ecuador, social assistance programs had little effect in reducing earnings losses caused by the COVID-19 pandemic, leading to a renewed discussion on the implementation of a universal basic income (UBI). This study evaluates the potential impact of social assistance reforms using tax-benefit microsimulation techniques. Four simulated counterfactual reforms are assessed, ranging from an extension of current social assistance programs to the implementation of UBI, which would replace existing programs and be partially funded through progressive personal income tax and social security contributions. Our findings demonstrate that poverty and inequality would decrease significantly under the more generous UBI scenarios. This research contributes to the ongoing debate on the potential benefits of UBI in reducing poverty and inequality and emphasizes the importance of considering alternative social assistance reforms in the face of growing systemic challenges. |
| Keywords: | cash transfers; Ecuador; inequality; micro-simulation; poverty; social protection; tax reform; universal basic income; Covid-19; coronavirus |
| JEL: | H24 H53 I38 |
| Date: | 2024–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:121120&r=pbe |
| By: | Fausto Cavalli; Alessandra Mainini; Daniela Visetti |
| Abstract: | We propose a model with economic and environmental domains that interact with each other. The economic sphere is described by a Solow growth model, in which productivity is not exogenous but negatively affected by the stock of pollution that stems from the production process. A regulator can charge a tax on production, and the resources collected from taxation are used to reduce pollution. The resulting model consists of a two dimensional discrete dynamical system, and we study the role of taxation from both a static and a dynamical point of view. The focus is on the determination of the conditions under which taxation has a positive effect on the environment and leads to economic growth. Moreover, we show that a suitable environmental policy can allow recovering both local and global stability of the steady states. On the contrary, we show that, if the policy is not adequate, the system can exhibit endogenous oscillating and chaotic behavior and multistability phenomena. |
| Keywords: | Economic-environmental modelling, environmental policy, complex dynamics, multistability, nonlinear analysis. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:530&r=pbe |
| By: | Hasan Ulas Altiok (Department of Banking and Finance Eastern Mediterranean University, North Cyprus); Amin Sokhanvar (Cambridge Resources International (Canada), Kingston, Ontario, Canada.); Glenn P. Jenkins (Department of Economics, Queen's University, Kingston, Ontario, Canada and Cyprus International University, Nicosia, North Cyprus.) |
| Abstract: | The Social Security Pension System of North Cyprus is experiencing a pronounced deficit, with a pattern of structural imbalances that necessitate immediate policy attention. Our analysis reveals a consistent deficit averaging 50% of social security pensions paid, or 3.2% of gross domestic product (GDP). Given the aspirations of North Cyprus to join the European Union, correction of these imbalances at an early date is imperative. Women, because of their longer expected lifespan, receive a 5% higher subsidy than men earning equal incomes through their working lives. However, lower-income individuals (often women) are at a critical disadvantage in terms of the monetary value of the subsidy received. The system's dependence on general budget financing points toward a non-sustainable future. At the same time the Provident Fund, to which all employees are required to contribute 8% of their declared incomes, is a systematic mechanism for reducing workers' savings in an inflationary environment. Workers contributing to the Provident Fund over the past 13 years will receive back from the government only between 40% and 49% of the value of what they could have cumulated from a 3% or 0% real return alternative investment that received the same tax treatment. This article crystallizes the critical findings and suggests policy recommendations for the substantial pension system reform that is necessary to ensure fiscal sustainability and equitable treatment of all income groups. |
| Keywords: | Pension System Deficit, Fiscal Sustainability, North Cyprus Social Security, Pension Reform, Contribution Rates, Provident Fund Contributions |
| JEL: | H24 H26 |
| Date: | 2024–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:qed:dpaper:4613&r=pbe |