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on Public Finance |
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Issue of 2012‒09‒03
six papers chosen by |
| By: | Aizenman, Joshua; Jinjarak, Yothin |
| Abstract: | This paper investigates the association between greater income inequality, de-facto fiscalspace, and sovereign spreads. Using data from 50 countries in 2007, in 2009 and in 2011, wefind that higher income inequality is associated with a lower tax base, lower de-facto fiscalspace, and higher sovereign spreads. The economic magnitude of these effects is rather large: anincrease in the Gini coefficient of inequality by 1 (in a scale of 0-100), is associated in 2011 witha lower tax base of 2 percent of the GDP, and with a higher sovereign spread of 45 basis points |
| Keywords: | Economics, Income inequality, tax-base, Fiscal space, sovereign spreads |
| Date: | 2012–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdl:ucscec:qt4fc5p36t&r=pub |
| By: | Nora Lustig (Department of Economics, Tulane University); George Gray Molina (Chief Economist for UNDP-Latin America and the Caribbean, New York, New York); Sean Higgins (Department of Economics, Tulane University); Miguel Jaramillo (GRADE (Grupo de Análisis para el Desarrollo), Peru); Wilson Jimenez; Veronica Paz; Claudiney Pereira (Department of Economics, Tulane University); Carola Pessino (School of Government and Executive Director, Centro de Investigaciones y Evaluación en EconomÃa Social para el Alivio de la Pobreza, Universidad Torcuato Di Tella, Buenos Aires, Argentina); John Scott (CIDE (Centro de Investigación y Docencia Económicas), Mexico and,Consejero Académico, CONEVAL (Consejo Nacional de Evaluación de la PolÃtica de Desarrollo Social), Mexico); Ernesto Yanez |
| Abstract: | We apply a standard tax and benefit incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average) especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers-especially transfers that are progressive in absolute terms--as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third and even second decile on average, depending on the country. When in-kind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash transfers that are progressive in absolute terms is increased, leakages to the nonpoor are reduced and coverage of the extreme poor by direct transfer programs is expanded. |
| Keywords: | fiscal incidence, inequality, poverty, taxes, social spending, Latin America |
| JEL: | D31 D63 H11 H22 H5 I14 I24 I3 O15 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:1216&r=pub |
| By: | Busom, Isabel (Universitat Autonoma de Barcelona); Corchuelo, Beatriz (Universidad de Extremadura); Martinez Ros, Ester (UNU-MERIT/MGSoG, and Universidad Carlos III de Madrid) |
| Abstract: | This paper studies whether firms' use of R&D subsidies and R&D tax incentives are correlated to two sources of underinvestment in R&D, financing constraints and appropriability. We find that financially constrained SMEs are less likely to use R&D tax credits and more likely to obtain subsidies. SMEs using legal methods to protect their intellectual property are more likely to use tax incentives. Results are ambiguous for large firms. For both having previous experience in R&D increases the likelihood of using tax incentives, while it reduces the likelihood of using exclusively subsidies, suggesting that the latter induce entry into R&D. Results imply that direct funding and tax credits do not have the same ability to address each source of R&D underinvestment, and that on average subsidies may be better suited than tax credits at least for SMEs. From a policy perspective these tools may be complements rather than substitutes |
| Keywords: | Research and Development, R&D, tax incentives, subsidies, policy mix |
| JEL: | H25 L60 O31 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2012056&r=pub |
| By: | Zinn, Benedikt; Spengel, Christoph |
| Abstract: | We use a unique matched tax return-financial statement data set to examine the magnitude and sources of book-tax differences in Germany. For the first time, the data set enables us to evaluate the extent to which financial and tax accounting differ in Germany in the most accurate manner. Despite the close link between financial and tax accounting in Germany, we find that corporate taxable income and income reported to shareholders diverge considerably. Regression results suggest that this reporting gap is largely attributable to legal differences between financial and tax accounting and we cannot provide evidence that tax aggressive reporting adds to it. However, further analyses show that firms actively engaged in corporate restructuring exhibit larger book-tax differences than other firms. We interpret this result as evidence of firms willing to give up the administrative advantages of a one-book accounting system in order to achieve desired tax or financial accounting result, if book-tax conformity is not required. Thus, the results not only provide insights into the relatively unexplored area of behavioral response to changes in the degree of book-tax conformity, but also add a new perspective to the discussion surrounding the implementation of the German Accounting Law Modernization Act (BilMoG) in 2010. -- |
| Keywords: | book-tax conformity,book-tax differences,tax planning |
| JEL: | H20 H25 M41 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:12051&r=pub |
| By: | Brekke, Kjell Arne (Dept. of Economics, University of Oslo); Konow , James (Department of Economics, Loyola Marymount University,); Nyborg, Karine (Dept. of Economics, University of Oslo) |
| Abstract: | In social dilemmas, there is tension between cooperation that promotes the common good and the pursuit of individual interests. International climate change negotiations provide one example: although abatement costs are borne by individual countries, the benefits are shared globally. We study a multi-period, threshold public goods game with unequally endowed participants and communication in which the decision variable is framed in three seemingly inconsequential ways: as absolute contributions, contributions relative to endowments and in terms of the effects of contributions on final payoffs. We find considerable agreement that “rich” (or high endowed) persons contribute more than “poor” (or low endowed) individuals at levels that are invariant across frames. Frames do, however, significantly affect both preferred and actual contributions for the poor: they contribute significantly less when the decision variable makes the effects on final payoffs salient than when it is framed in terms of absolute contributions. Contributions are explained mostly by self-interest, justice preferences, and experiencing failed negotiations, but we find no effects of reciprocity toward individuals or of the suggestions of others about what one should contribute. |
| Keywords: | Public good game; threshold; communication; fairness; endowment heterogeneity |
| JEL: | D63 D64 H41 |
| Date: | 2012–05–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:osloec:2012_016&r=pub |
| By: | Markussen, Thomas; Reuben, Ernesto; Tyran, Jean-Robert |
| Abstract: | The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular but the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted. If likely losers from competition have veto power, it is often not, and substantial gains in efficiency are foregone. |
| Keywords: | public goods; competition; tournament; cooperation; voting |
| JEL: | D72 H41 J33 |
| Date: | 2012–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9099&r=pub |