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on Public Finance |
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Issue of 2012‒11‒24
eight papers chosen by |
| By: | O.A. Carboni; P. Russu |
| Abstract: | This paper studies the equilibrium dynamics of a growth model with public finance where two different allocations of public resources are considered. The model simultaneously determines the optimal shares of consumption, capital accumulation, taxes and composition of the two different public expenditures which maximize a representative household s lifetime utilities in a centralized economy. The analysis supplies a closed form solution. Moreover, with one restriction on the parameters (?=?) we fully determine the solutions path for all variables of the model and determine the conditions for balanced growth. |
| Keywords: | Growth models; Fiscal policy; Public spending composition |
| JEL: | H50 E13 O40 H20 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201229&r=pub |
| By: | Uwe Dulleck; Jonas Fooken; Cameron Newton; Andrea Ristl; Markus Schaffner; Benno Torgler |
| Abstract: | Although paying taxes is a key element in a well-functioning civilized society, the understanding of why people pay taxes is still limited. What current evidence shows is that, given relatively low audit probabilities and penalties in case of tax evasion, compliance levels are higher than would be predicted by traditional economics-of-crime models. Models emphasizing that taxpayers make strategic, financially motivated compliance decisions, seemingly assume an overly restrictive view of human nature. Law abidance may be more accurately explained by social norms, a concept that has gained growing importance as a facet in better understanding the tax compliance puzzle. This study analyzes the relation between psychic cost arising from breaking social norms and tax compliance using a heart rate variability (HRV) measure that captures the psychobiological or neural equivalents of psychic costs (e.g., feelings of guilt or shame) that may arise from the contemplation of real or imagined actions and produce immediate consequential physiologic discomfort. Specifically, this nonintrusive HRV measurement method obtains information on activity in two branches of the autonomous nervous system (ANS), the excitatory sympathetic nervous system and the inhibitory parasympathetic system. Using time-frequency analysis of the (interpolated) heart rate signal, it identifies the level of activity (power) at different velocities of change (frequencies), whose LF (low frequency) to HF (high frequency band) ratio can be used as an index of sympathovagal balance or psychic stress. Our results, based on a large set of observations in a laboratory setting, provide empirical evidence of a positive correlation between psychic stress and tax compliance and thus underscore the importance of moral sentiment in the tax compliance context. |
| Keywords: | tax compliance; psychic costs; stress; tax morale; cooperation; heart rate variability; biomarkers; experiment |
| JEL: | H26 H41 K42 D31 D63 C91 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2012-19&r=pub |
| By: | Valeria De Bonis; Alessandro Gandolfo |
| Abstract: | Beginning with the 1990’s, the gaming services sector has undergone several changes that have induced governments to review gambling taxes. We examine the economic rationale behind actual and prospected reforms, comparing different tax instruments with respect to their incidence. |
| Keywords: | gaming sector; government policy and regulation; taxation incidence. |
| JEL: | H22 K34 M38 |
| Date: | 2012–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2012/156&r=pub |
| By: | Du Rietz, Gunnar (Research Institute of Industrial Economics (IFN)); Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Waldenström, Daniel (Department of Economics) |
| Abstract: | This paper studies the evolution of the modern Swedish inheritance taxation from its introduction in 1885 to its abolishment in 2004. A thorough description is offered of the basic principles of the tax, including underlying ideas and ambitions, tax schedules, and rules concerning valuation of assets, liability matters and deduction opportunities. Using these rules, we calculate inheritance tax rates for the whole period for a number of differently endowed family firms and individuals. The overall trend in inheritance tax burden exhibits an inverse-U shape for all firms and individuals. Up until World War II, inheritance tax rates were very low (never above six percent), but in the postwar era tax rates increased rapidly for both inherited firms and individual fortunes. Effective tax rates peaked in the mid-1970s. Valuation reliefs were introduced in the 1970s, which sharply reduced tax rates for inherited family businesses. Tax rates for deceased individuals were first cut in 1987 and then significantly reduced in 1991–1992. Finally, inheritance and gift tax revenues were relatively small, around a quarter of a percent of GDP. |
| Keywords: | Gift tax; Inheritance tax; Estate tax; Tax avoidance; Excess burden; Entrepreneurship; Ownership transfers of family firms |
| JEL: | D31 H20 K34 |
| Date: | 2012–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uunewp:2012_018&r=pub |
| By: | Nora Lustig; Carola Pessino |
| Abstract: | Between 2003 and 2009, Argentina’s social spending as a share of GDP increased by 7.6 percentage points. Marginal benefit incidence analysis for 2003, 2006, and 2009 suggests that the contribution of cash transfers to the reduction of disposable income inequality and poverty rose markedly between 2006 and 2009 primarily due to the launching of a noncontributory pension program – the pension moratorium – in 2004. Noncontributory pensions as a share of GDP rose by 2.2 percentage points between 2003 and 2009 and entailed a redistribution of income to the poor, and from the formal sector pensioners with above minimum pensions to the beneficiaries of the pension moratorium. The redistributive impact of the expansion of public spending on education and health was also sizeable and equalizing, but to a lesser degree. An assessment of fiscal funding sources puts the sustainability of the redistributive policies into question, unless nonsocial spending is significantly cut. |
| Keywords: | social spending, benefit incidence, inequality, poverty, Argentina |
| JEL: | D31 H22 I38 |
| Date: | 2012–11 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:499&r=pub |
| By: | Aronsson, Thomas (Department of Economics); Micheletto, Luca (Uppsala Center for Fiscal Studies); Sjögren, Tomas (Department of Economics) |
| Abstract: | This paper re-examines the question of whether federal ex-post redistribution in terms of public funds leads to under-provision of public goods by adding the assumption that the member states are free to leave the economic federation. We show that federal ex-post redistribution leads to e¢ cient provision of local and federal public goods under certain conditions. |
| Keywords: | Public goods; …scal federalism; ex-post redistribution |
| JEL: | D61 H41 H77 |
| Date: | 2012–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:uufswp:2012_012&r=pub |
| By: | Giuranno, Michele G.; Rongili, Biswas |
| Abstract: | This paper develops a model of centralized public spending where decision-makers are the regional median voters instead of the national median voter of the received literature. Regional representatives decide the level of public spending by bargaining in the central legislature. We study how exogenous changes in the composition of the regional electorate either deteriorate or mitigate inter-jurisdictional redistributive conflicts and how these, in turn, influence the size of the government. We find the conditions under which migration-induced inter-regional income convergence (divergence) leads either to a bigger or a smaller government. Finally, the relationship between migration and efficiency is explored within the present framework. |
| Keywords: | Demographic Changes; Government Spending; Inequality; Redistribution; Bargaining; Political Economy Theory |
| JEL: | H50 R1 D30 H41 D78 H00 |
| Date: | 2012–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42604&r=pub |
| By: | Dell'Anno, Roberto; Dollery, Brian |
| Abstract: | This paper provides an empirical analysis of fiscal illusion by estimating an index of fiscal illusion for 28 European countries over the period 1995–2008 employing a structural equation approach. Using MIMIC models, the paper investigates the main indicators of fiscal illusion and develops an index of fiscal illusion. It concludes that the chief deterninants for the deployment of fiscal illusion strategies are the share of self-employment on total employment, the educational level of citizens, and the size of tax burden. At the same time, policy makers attempt to ‘conceal’ the real tax burden by means of debt illusion, fiscal drag, wage withholding taxes, as well as taxes on labour. |
| Keywords: | Fiscal illusion; Financial illusion; MIMIC model; European countries |
| JEL: | H8 O52 H3 |
| Date: | 2012–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42537&r=pub |