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on Public Finance |
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Issue of 2011‒11‒21
five papers chosen by |
| By: | Stéphane Gauthier (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris) |
| Abstract: | This note characterizes the optimal base for commodity taxation in the presence of administrative fixed costs varying across goods. For low tax rates, the optimal base comprises all commodities whose discouragement index is greater than the ratio of their administrative costs to the tax they yield. |
| Keywords: | Indirect taxation, VAT, tax base, administrative costs. |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00639800&r=pub |
| By: | Isabel Busom; Beatriz Corchuelo; Ester Martínez-Ros |
| Abstract: | The measurement of the effects that public support to private R&D has on R&D investment and output has attracted substantial empirical research in the last decade. The focus of this research has mostly focused on testing for possible crowding out effects. There is virtually no study aiming at understanding how and why these effects may or may not be occurring. In addition, the effects of the two most common tools of public support, direct funding through grants and loans, and tax incentives, have been studied separately. We contribute to existing work by focusing on the determinants of the use by firms of these two mechanisms and their potential link to sources of market failures. We think this is an important step to assess impact estimates. Using firm-level data from the Spanish Community Innovation Survey (CIS), we find that firms that face financial constraints, as well as newly created firms, are less likely to use R&D tax credits and more likely to apply for and obtain direct public funding. We also find that large firms that care about knowledge protection are more likely to apply for and obtain direct funding, while SMEs are more likely to use tax incentives. Our results show that direct funding and tax credits, as currently designed, are not perfect substitutes because firms are heterogeneous, and suggest that from a social perspective, and provided that crowding out effects can be ruled out for both instruments, some combination of both may be preferable to relying on only one |
| Keywords: | R&D subsidies, R&D tax credits, R&D, CIS, Policy evaluation |
| JEL: | H25 L60 O38 O31 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:cte:idrepe:id-11-03&r=pub |
| By: | Leonzio Rizzo; Alejandro Esteller - Moré |
| Abstract: | US excise tax rates are state interdependent. For example, a one-cent increase in the cigarette tax rate implies a contemporaneous cigarette tax increase of 0.18 cents in the neighboring state, while in the case of gasoline taxation the reaction to the same rise is just 0.11 cents. However, identifying the source of this interaction is key to its normative assessment. Our empirical analysis – spanning the period 1992 to 2006 – finds that interdependence in the case of gasoline taxation is driven just by the (fear of) base mobility. By contrast, in the case of cigarette taxation, it is politically driven: only states with non-term limited governors react (providing evidence of yardstick competition), especially as the election year approaches. Additionally, cigarette taxes tend to be lower when the election year approaches, but again only under non-term limited governors, while the existence of smokers in the state tends to reduce the level of cigarette taxation independently of the electoral cycle and of the presence of a term limited governor. |
| Keywords: | vertical tax competition; yardstick competition; termlimit; election year |
| JEL: | H71 H77 |
| Date: | 2011–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:udf:wpaper:201116&r=pub |
| By: | Marta Rodrigues Monteiro (Faculdade de Economia, Universidade do Porto); Elísio Fernando Moreira Brandão (Faculdade de Economia, Universidade do Porto); Francisco Vitorino da Silva Martins (Faculdade de Economia, Universidade do Porto) |
| Abstract: | This paper studies the economic determinants of corporate tax revenue to Gross Domestic Product (GDP) across European Union members over the period 1998-2009. The Feasible Generalized Least Squares (FGLS) regression results suggest that structural, cyclical, international and institutional factors such as GDP, Government Deficit, Industry Turnover, Unemployment, Number of Enterprises, Trade Openness, Foreign Direct Investment (FDI) and Corruption affect revenue performance of an economy. Thus, the findings show that Unemployment Rate and Corruption have an adverse effect on tax collection, while the other analysed factors contribute to a better performance concerning tax collection. In the present paper we also consider as explanatory factors the tax variables Effective Average Tax Rate (EATR) and Effective Marginal Tax Rate (EMTR). In fact, empirical results indicate a parabolic relationship between EMTR and corporate tax revenues, reinforcing the hypothesis of the existence of a Laffer curve. Our findings also suggest that the last two years of European Union enlargement are likely not to have had effect in corporate tax revenue to GDP. In addition, specific factors of some countries (Greece, Portugal and Spain) seem to positively affect corporate revenues. |
| Keywords: | Corporate Tax Revenue, EATR, EMTR, Corruption, Laffer Curve |
| JEL: | H25 H26 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:437&r=pub |
| By: | Feige, Edgar L.; Cebula, Richard |
| Abstract: | Abstract This study empirically investigates the extent of noncompliance with the tax code and examines the determinants of federal income tax evasion in the U.S. Employing a refined version of Feige’s (1986; 1989) General Currency Ratio (GCR) model to estimate a time series of unreported income as our measure of tax evasion, we find that 18-23 % of total reportable income may not properly be reported to the IRS. This gives rise to a 2009 “tax gap” in the range of $390-$537 billion. As regards the determinants of tax noncompliance, we find that federal income tax evasion is an increasing function of the average effective federal income tax rate, the unemployment rate, the nominal interest rate, and per capita real GDP, and a decreasing function of the IRS audit rate. Despite important refinements of the traditional currency ratio approach for estimating the aggregate size and growth of unreported economies, we conclude that the sensitivity of the results to different benchmarks, imperfect data sources and alternative specifying assumptions precludes obtaining results of sufficient accuracy and reliability to serve as effective policy guides. |
| Keywords: | Unreported economy; Underground economy; tax evasion; tax gap; noncompliance; income tax evasion; currency demand approach; currency ratio models |
| JEL: | O17 E52 E26 H26 E41 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:34781&r=pub |