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on Public Finance |
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Issue of 2012‒04‒10
six papers chosen by |
| By: | Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| Abstract: | The standard economic approach to tax policy has to a large extent relied on welfarist theories of justice, in particular the utilitarian view that the government should try to maximize the sum of individual welfare. This welfarist framework has proved a productive point of departure for much economic analysis, but it has an important limitation in its inability to take into account considerations of personal responsibility. Welfarist theories evaluate policies solely on the basis of their consequences for individual welfare, and thus do not assign any intrinsic importance to how a specific situation came about. |
| Keywords: | Tax policy; Income inequality; Fairness. |
| JEL: | D31 D63 J31 |
| Date: | 2012–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2012_003&r=pub |
| By: | Bastani, Spencer (Uppsala Center for Fiscal Studies) |
| Abstract: | In a recent paper Alesina et al. (2011) construct a model in which different labor supply elasticities for men and women emerge endogenously from intra-household bargaining. In this paper I explore the optimal tax implications of their model in an economy with both singles and couples and inequality across as well as within households. In the model, the welfare of married women can be improved by lowering taxes for single women. Moreover, if single men earn more than single women, the welfare of married women can alternatively be improved by a gender-neutral tax scheme which taxes singles at a higher rate. Because the government is concerned not only with equalizing utilities within families, but also with the redistribution between high income and low income households, gender-based adjustments in the income tax must be weighed against the welfare consequences of changing the progressivity of the tax system. I find that larger lump-sum transfers to women is always optimal. Interestingly, marginal tax rates, on the other hand, should be lower for women only if the exogenous bargaining power of men is moderate. The welfare gains of gender based taxation are sizable and the welfare gains of having tax instruments which depend on household composition are even larger. |
| Keywords: | optimal taxation; tagging; family economics; intra-household bargaining |
| JEL: | D13 H21 J16 J20 |
| Date: | 2012–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2012_006&r=pub |
| By: | Edmark, Karin (Research Institute of Industrial Economics (IFN)); Liang, Che-Yuan (Department of Economics); Mörk, Eva (Department of Economics); Selin, Håkan (Department of Economics) |
| Abstract: | Over the last twenty years we have seen an increasing use of in-work tax subsidies to encourage labor supply among low-income groups. In Sweden, a non-targeted earned income tax credit was introduced in 2007, and was reinforced in 2008, 2009 and 2010. The stated motive of the reform was to boost employment; in particular to provide incentives for individuals to go from unemployment to, at least, part-time work. In this paper we try to analyze the extensive margin labor supply effects of the Swedish earned income tax credit reform up to 2008. For identification we exploit the fact that the size of the tax credit, as well as the resulting average tax rate, is a function of the municipality of residence and income if working. However, throughout the analysis we find placebo effects that are similar in size to the estimated reform effects. In addition, the results are sensitive with respect to how we define employment, which is especially true when we analyze different subgroups such as men and women, married and singles. Our conclusion is that the identifying variation is too small and potentially endogenous and that it is therefore not possible to use this variation to perform a quasi-experimental evaluation of the Swedish EITC-reform. |
| Keywords: | Labor supply; Labor force participation; Tax incentives |
| JEL: | H24 J21 |
| Date: | 2012–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0901&r=pub |
| By: | Lukas Vogel |
| Abstract: | The paper extends the QUEST III model by home production to discuss fiscal limits in an economy with tax avoidance. It finds that revenue-maximising labour and corporate tax rates in the benchmark model are relatively high (54% and 72%) compared to current EU-average implicit tax rates. No such limit is found for the consumption tax. Higher substitutability between market and home production flattens the Laffer curves for labour and corporate taxation and introduces one for the consumption tax. Although higher tax rates raise additional tax revenue, the economic costs of higher distortionary taxation in terms of output contraction are substantial. |
| JEL: | E62 H20 H30 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0448&r=pub |
| By: | Fischer, Justina A.V. |
| Abstract: | This paper describes the socio-economic adjustment effects exerted by globalization (taking as starting points competitive pressure, sectoral shifts, and financial market contagion) and discusses their relevance for domestic policy-making. I argue that these economic pressures and the resulting transformations in the domestic economy constrain government’s policy choice set to an extent that actual policies are quite freed from any political ideological context. However, important government tasks in a globalized economy remain: remedying information asymmetries between buyers and sellers, regulating markets to combat externalities, as well as providing essential goods. |
| Keywords: | globalization; trade; domestic policy; deregulation; competition; financial markets; government intervention |
| JEL: | F16 F15 F42 F18 D62 H41 G15 F01 D82 |
| Date: | 2012–04–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37816&r=pub |
| By: | Fischer, Justina AV |
| Abstract: | This paper postulates that a country’s integration into the world economy may lower citizens’ political trust. I argue that economic globalization constrains government’s choice set of feasible policies, impeding responsiveness to the median voter. Matching individual-level survey data from 1981 to 2007, repeated cross-sections of altogether 260’000 persons from 80 countries, with a measure of a country’s degree of economic globalization for the same time period, I find that there is a trust-lowering impact of globalization; its magnitude, however, depends on whether or not the individual is informed about politics and the economy. Trust-lowering effects of globalization are larger for those who have no interest in politics, are unwilling to indicate their political leaning, or who have low educational levels. Two-stage least squares regressions and a set of country and time fixed effects support a causal interpretation. Obviously, viewing the domestic government as accountable for its policies plays a decisive role for the relation between economic globalization and political trust. Robustness against country’s degree of economic development, past globalization and different time periods is tested. |
| Keywords: | Political trust; globalization; international trade; openness; FDI; World Values Survey |
| JEL: | F15 H41 Z13 |
| Date: | 2012–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37763&r=pub |