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on Public Finance |
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Issue of 2018‒10‒22
five papers chosen by |
| By: | Jessen, Robin; Metzing, Maria; Rostam-Afschar, Davud |
| Abstract: | A common assumption in the optimal taxation literature is that the social planner maximizes a welfarist social welfare function with weights decreasing with income. However, high transfer withdrawal rates in many countries imply very low weights for the working poor in practice. We reconcile this puzzle by generalizing the optimal taxation framework by Saez (2002) to allow for alternatives to welfarism. We calculate weights of a social planner’s function as implied by the German tax and transfer system based on the concepts of welfarism, minimum absolute and relative sacrifice, as well as subjective justness. For the latter we use a novel question from the German Socio-Economic Panel. We find that the minimum absolute sacrifice principle is in line with social weights that decline with net income. Absolute subjective justness is roughly in line with decreasing social weights, which is reflected by preferences of men, West Germans, and supporters of the grand coalition parties. |
| Keywords: | Justness,Optimal Taxation,Income Redistribution,Equal Sacrifice,Inequality,Subjective Preferences |
| JEL: | D63 D60 H21 H23 I38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181612&r=pub |
| By: | Di Nola, Alessandro; Kocharkov, Georgi; Scholl, Almuth; Tkhir, Anna-Mariia |
| Abstract: | There is a sizeable overall tax gap in the U.S., albeit tax noncompliance differs sharply across income types. While only small percentages of wages and salaries are underreported, the estimated misreporting rate of self-employment business income is substantial. This paper studies how tax evasion in the self-employment sector affects aggregate outcomes and inequality. To this end, we develop a dynamic general equilibrium model with incomplete markets in which heterogeneous agents choose between being a worker and being self-employed. Self-employed agents may hide a share of their business income but are confronted with the probability of being detected by the tax authority. Our model replicates important quantitative features of U.S. data, in particular, the misreporting rate, wealth inequality, and the firm size distribution. Our quantitative findings suggest that tax evasion induces self-employed businesses to stay small. In the aggregate, tax evasion increases the size but decreases the productivity of the self-employment sector. Moreover, it increases aggregate savings and reduces wealth inequality. We show that tax revenues follow a Laffer curve in the size of the tax evasion penalty. |
| Keywords: | Tax evasion,Self-Employment,Wealth inequality,Tax policy. |
| JEL: | H24 H25 H26 C63 E62 E65 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc18:181514&r=pub |
| By: | Charlotte Bartels; Dirk Neumann |
| Abstract: | Redistribution across individuals in a one-year-period framework is an empirically intensely studied question. However, a substantial share of annual redistribution might turn out to serve individual insurance in a longer perspective. In particular, public pensions, that smooth incomes over the life-cycle and are funded by high taxes, play an increasingly important role in welfare states with aging societies. This paper investigates to what extent long-run redistribution diverges from annual redistribution in welfare states of different types. Exploiting panel data from the Cross-National Equivalent File (CNEF) for Australia, Germany, Korea, Switzerland, the United Kingdom and the United States, we find that supposedly highly redistributive welfare states like Germany provoke comparably less redistribution between individuals in the long-run than the United Kingdom or the United States. Regression results show that a higher share of elderly is associated with higher annual redistribution, but with less long-run redistribution between individuals. |
| Keywords: | Welfare states, redistribution, insurance |
| JEL: | D31 D63 H53 H55 I38 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp985&r=pub |
| By: | John Freebairn (Department of Economics, The University of Melbourne); ; |
| Abstract: | An effective tax rate is measured by the difference between the pre-tax return earned by the company investor and the after-tax return received by the saver providing the funds. The personal income and foreign withholding taxes as well as the corporate income tax are considered. Under current taxation in Australia, effective tax rates vary between debt and equity, resident and nonresident savers, distributed and retained earnings, and across companies of different sizes. Corporate income tax reforms, including changes to the tax base and the tax rate, change the patterns of, as well as the magnitudes of, effective tax rates. By way of illustration, effects of a lower corporate tax rate and of accelerated depreciation on the pattern and magnitudes of effective tax rates are assessed. |
| Date: | 2018–05 |
| URL: | http://d.repec.org/n?u=RePEc:mlb:wpaper:2039&r=pub |
| By: | John Cawley; Chelsea Crain; David Frisvold; David Jones |
| Abstract: | We estimate the incidence of a relatively new type of excise tax, a tax on sugar-sweetened beverages (SSBs). We examine the largest such tax to date, which is two cents per ounce, in Boulder, CO. Using data that were hand-collected from stores and restaurants in both Boulder and two control communities, as well as internet data of restaurant menus, we find that the tax was largely, but not completely, passed through to consumers 5-7 weeks after implementation. Some retailers add the tax only at the register, indicating that estimates solely from posted prices would result in an underestimate of pass-through. |
| JEL: | H22 H75 I18 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25050&r=pub |