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on Public Finance |
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Issue of 2013‒08‒23
six papers chosen by |
| By: | Fred Célimène; Gilles Dufrénot; Gisèle Mophou; Gaston N’Guérékata |
| Abstract: | This paper presents a continuous time stochastic growth model to study the e¤ects of tax evasion and tax corruption on the level and volatil- ity of private investment and public spending. Our results suggest that there do exist several regimes of mean growth and growth volatility, de- pending upon the consumers degree of risk aversion, the tax income yield, the risk-adjusted return of the agents portfolio, the productivity of public spending. We nd that public spending is described asymptotically by an incomplete upper Gamma distribution, while private capital is described by a power law distribution. Depending upon the values of the parame- ters of these distributions, growth can be characterized by extreme values (high volatility) when the return to taxation lies under a certain threshold and/or when the risk-adjusted return of investing the proceeds of illegal activities evolves above a given threshold. We provide an empirical illus- tration of the model. |
| Keywords: | Stochastic growth; tax evasion; tax corruption |
| JEL: | H26 D91 O41 |
| Date: | 2013–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2013-1043&r=pub |
| By: | Eric Weyl (University of Chicago); Charles Nathanson (Harvard University); Ben Lockwood (Harvard University) |
| Abstract: | Taxation affects the allocation of talented individuals across industries by blunting material incentives and thus relatively magnifying the non-pecuniary benefits of pursuing a "calling". If higher-paying industries (e.g. finance and management) generate less positive net externalities than lower-paying professions (e.g. public service and education) this may enhance efficiency. We develop a theory of income taxation as implicit Pigouvian taxation of these externalities and calibrate it using data on the distribution of income and talent across industries. Even without any redistributive motive, tax rates are highly sensitive to the externalities assumed within a spectrum many would consider reasonable: they range from extremely regressive to highly progressive at high incomes. Our theory thus offers an alternative, pure efficiency rationale for non-linear income taxation, challenging the connection between high long-run labor supply elasticities and low optimal tax rates and motivating further study of the externalities generated by professions. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed013:56&r=pub |
| By: | Fuest, Clemens; Spengel, Christoph; Finke, Katharina; Heckemeyer, Jost; Nusser, Hannah |
| Abstract: | This paper discusses the issue of profit shifting and 'aggressive' tax planning by multinational firms. The paper makes two contributions. Firstly, we provide some background information to the debate by giving a brief overview over existing empirical studies on profit shifting and by describing arrangements for IP-based profit shifting which are used by the companies currently accused of avoiding taxes. We then show that preventing this type of tax avoidance is, in principle, straightforward. Secondly, we argue that, in the short term, policy makers should focus on extending withholding taxes in an internationally coordinated way. Other measures which are currently being discussed, in particular unilateral measures like limitations on interest and license deduction, fundamental reforms of the international tax system and country-by-country reporting, are either economically harmful or need to be elaborated much further before their introduction can be considered. -- |
| Keywords: | tax avoidance,profit shifting,multinational firms,intellectual property,tax policy,tax reform |
| JEL: | H20 H25 F23 K34 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13044&r=pub |
| By: | Colin Busby (C.D. Howe Institute); Alex Laurin (C.D. Howe Institute) |
| Abstract: | A revenue-neutral tax swap would improve Alberta’s fiscal prospects, according to a report released today by the C.D. Howe Institute. In “The 8 Percent Solution: A Sensible Tax Compromise for Albertans,” authors Colin Busby and Alexandre Laurin propose a change that would better equip Alberta’s government to meet its longer-term fiscal challenges, which include plunging resource revenues and growing budget deficits. |
| Keywords: | Fiscal Policy and Tax Competitiveness |
| JEL: | H20 H21 H30 H61 H62 H71 |
| URL: | http://d.repec.org/n?u=RePEc:cdh:ebrief:159&r=pub |
| By: | Nickel, Christiane; Tudyka, Andreas |
| Abstract: | We investigate the impact of fiscal stimuli at different levels of the government debt-to-GDP-ratio for a sample of 17 European countries from 1970 to 2010. This is implemented in an interacted panel VAR framework in which all coefficient parameters are allowed to change continuously with the debt-to-GDP ratio. We find that responses to government spending shocks exhibit strong non-linear behaviour. While the overall cumulative effect of a spending shock on real GDP is positive and significant at moderate debt-to-GDP ratios, this effect turns negative as the ratio increases. The total cumulative effect on the trade balance is negative at first but switches sign at higher levels of debt. Consequently, depending on the degree of public indebtedness, our results accommodate long-run fiscal multipliers which are greater and smaller than one or even negative as well as twin deficit and twin divergence behaviour within one sample and time period. From a policy perspective, these results lend additional support to increased prudence at high public debt ratios because the effectiveness of fiscal stimuli to boost economic activity or resolve external imbalances may not be guaranteed. JEL Classification: E62, F32, F41, C32, C11 |
| Keywords: | Bayesian estimation, debt dynamics, Fiscal Policy, non-linearities, panel-VAR, trade account |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20131513&r=pub |
| By: | Bernd Irlenbusch (University of Cologne); Rainer Michael Rilke (University of Cologne) |
| Abstract: | This paper experimentally investigates into the effects of limited feedback on contributions in a repeated public goods game. We test whether feedback about good examples (i.e., the respective maximum contribution in a period) in contrast to bad examples (i.e., the minimum contributions) induces higher contributions. When the selection of feedback is non-transparent to the subjects, good examples boost cooperation while bad examples hamper them. No significant differences are observed between providing good or bad examples, when the feedback selection rule is transparent. Our results shed new light on how to design feedback provision in public goods settings. |
| Keywords: | Public Goods, Feedback, Imperfect Conditional Cooperation, Experiment |
| JEL: | H41 C92 D82 |
| Date: | 2013–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:04-04&r=pub |