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on Public Finance |
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Issue of 2021‒02‒22
eight papers chosen by |
| By: | John Gallemore (University of Chicago - Booth School of Business); Stephan Hollander (Tilburg University - School of Economics and Management); Martin Jacob (WHU - Otto Beisheim School of Management) |
| Abstract: | We use U.S. Securities and Exchange Commission (SEC) filings to provide initial large-sample evidence regarding utilization of corporate tax provisions by U.S. firms under the Coronavirus Aid, Relief, and Economic Security Act (CARES). These tax provisions were intended to provide firms immediate liquidity to prevent widespread bankruptcies and layoffs in response to the COVID-19 pandemic. However, critics have argued that the provisions were poorly targeted and amounted to “giveaways†for shareholders of large corporations. We find that 38 percent of firms discuss at least one of the CARES tax provisions in their SEC filings, a result primarily attributable to the net operating loss (NOL) carryback provision. Firms experiencing lower stock returns during the COVID-19 outbreak are more likely to discuss CARES tax provisions, but not firms in states or industry sectors exhibiting large increases in unemployment. Further, we find a higher likelihood of tax provision discussions for firms with pre-pandemic losses and higher financial leverage. Finally, we document some evidence that firms facing potential reputational or political costs from discussing these tax provisions may have avoided doing so. Our analyses suggest that tax provisions under CARES were not material for most publicly-traded U.S. firms, were not likelier to benefit firms in greater need of liquidity during the pandemic, and that some firms perceived that disclosing benefits would be costly. These findings are important for policymakers as they consider additional economic relief for U.S. corporations while the coronavirus pandemic lingers. |
| Keywords: | Tax policy, net operating loss, payroll tax, economic stimulus, COVID-19, pandemics, disclosure, political costs |
| JEL: | H12 H25 H51 H84 I18 M41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-81&r=all |
| By: | Berliant, Marcus; Gouveia, Miguel |
| Abstract: | The literatures dealing with voting, optimal income taxation, implementation, and pure public goods are integrated here to address the problem of voting over income taxes and public goods. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realizations of the abilities of consumers drawn from a known distribution, but must meet the realization-dependent budget. Even though the space of alternatives is infinite dimensional, conditions on primitives are found to assure existence of a majority rule equilibrium when agents vote over both a public good and income taxes to finance it. |
| Keywords: | Voting; Income taxation; Public good |
| JEL: | D72 D82 H21 H41 |
| Date: | 2021–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:106138&r=all |
| By: | Agnès Bénassy-Quéré (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Hippolyte d'Albis (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | We revisit the standard theoretical model of tax competition to consider imperfect mobility of both capital and labor. We show that the mobility of one factor affects the taxation of both factors, and that the "race-to-the-bottom" narrative (with burden shifting) applies essentially to capital-exporting countries. We validate our predictions using a panel of 29 OECD countries over the period 1997-2017. The quantitative contribution of rising capital mobility to the decline of corporate income tax rates over our sample period is nonetheless less than that of population ageing. |
| Keywords: | Imperfect factor mobility,Globalization,Tax competition |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:psewpa:halshs-03134050&r=all |
| By: | Grégoire Rota-Graziosi (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Rabah Azerki; Islam Asif |
| Abstract: | This paper explores the interplay between top wealth and policies namely regulation and taxation exploiting variation in exposure to international commodity prices. Using a global panel dataset of billionaire's net worth, results point to a positive relationship between commodity prices and the concentration of wealth at the top. Regulation especially pertaining to competition is found to limit the effects of commodity price shocks on top wealth concentration while taxation has little effect. Moreover, commodity price shocks crowd out non-resource tax revenue hence limiting the scope for income transfers and redistribution. Results are consistent with the primacy of ex ante interventions over ex post ones to address top wealth inequality. |
| Keywords: | Inequality,Wealth concentration,Competition,Tax,Natural resources,Development |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03129746&r=all |
| By: | Alessandra Cepparulo; Giuseppe Eusepi; Luisa Giuriato |
| Abstract: | We analyse the Public Private Partnerships (PPPs) in order to account for their uneven distribution among the European Union countries and to identify the motivations of the public actor in selecting PPPs. We focus on the fiscal incentives to overcome budget and borrowing constraints, taking into account the political features and institutional frameworks of the countries. Using IMF data over the years 1990-2015, we confirm that the state of public finances impacts on the government’s choice of PPPs: more financially constrained governments find the PPP option attractive, while high-debt countries reduce the private investors’ interest in PPP. Fiscal rules increased the PPP bias in the pre-crisis period due to the possibility of off-balance accounting, while the post-crisis reform of the Stability and Growth Pact and the increased supranational and domestic surveillance seem to better discipline PPP employment. PPPs are, also, confirmed to be under the influence of political competition and government’s preferences for current expenditures. |
| Keywords: | Public Private Partnerships, Fiscal illusion, Budget constraints Fiscal rules |
| JEL: | C23 H54 L32 E62 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:wp195&r=all |
| By: | Kemal Cebeci (Public Finance, Marmara University, Faculty of Economics, Istanbul, Turkey,) |
| Abstract: | Capital taxes have an important place in the tax policy due to its role on economic growth and other effects. Capital taxes derived from different economic sources or parties such as: income of households, income of corporations, income of self-employed, stock of capital. In EU, related with the goals of the tax policy which can be explained as: equity-efficiency, capital taxation can be varied in different countries. For EU transition economies, economic growth may become preferential goal of the tax policy related with the relatively low level of GDP in contrast with EU15. So, EU transition economies may apply tax policy in favor of capital. In this study, we investigated our assumption: capital can be taxed at a lower level in EU11 economies compared to EU15 countries for encouraging capital†. Tax statistics of Eurostat on capital taxation for several indicators were used for the period of 2008-2018. Our statistical analysis and findings partially show that capital is taxed relatively low in EU transition economies and tax burden on capital has decreased more than EU15 in the period of 2008-2018. |
| Keywords: | Capital taxation, transition economies, tax policy, growth. |
| JEL: | H20 H21 H30 O40 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:aly:journl:202076&r=all |
| By: | Stefano Boscolo |
| Abstract: | This paper deals with the erosion of the personal income tax (PIT) base, a wellknown phenomenon that is undermining the redistributive features of the Italian tax system. Several sources of income previously subject to progressive marginal tax rates are now taxed under substitute proportional tax regimes or are entirely exempt from taxation. The existing tax system as of the 2019 tax year is compared with three alternative policy scenarios. First, a comprehensive income tax scheme where all income components are included in the PIT base is examined. Second, a flatrate personal income tax scheme with a drastic reduction in revenue is considered. Third, a further flat-rate tax scheme with a neutral effect on revenue is simulated. The focus of the comparison is on the unequal tax treatment of close equals. Decomposition approaches to the study of classical horizontal inequity are applied and discussed (van de Ven et al., 2001; Duclos et al., 2003; Urban and Lambert, 2008). The findings show that the erosion of the PIT base has increased the level of horizontal inequity of the tax system only negligibly, and that limited benefits would be obtained if a flat personal income tax were to be adopted. |
| Keywords: | classical horizontal inequity; comprehensive income tax; flat tax; redistribution; microsimulation; IT-EXEMPT |
| JEL: | D31 H23 H24 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:mod:dembwp:0176&r=all |
| By: | Aroop Chatterjee (WITS - University of the Witwatersrand [Johannesburg]); Léo Czajka (UCL - Université Catholique de Louvain); Amory Gethin (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab) |
| Abstract: | This paper considers the feasibility of implementing a progressive wealth tax to collect additional government revenue to both reinforce fiscal sustainability in the wake of the COVID-19 crisis and reduce persistent extreme inequality in South Africa. Drawing on our new companion paper, we first identify the tax base and discuss the design of potential tax schedules. Testing alternative tax schedules, we estimate how much additional revenue could be collected from a progressive tax on the top 1% richest South Africans. Our results show that under conservative assumptions, a wealth tax could raise between 70 and 160 billion Rands—1.5% to 3.5% of the South African GDP.We discuss in turn how sensitive our estimates are to assumptions on (1) mismeasurement of wealth and (2) tax avoidance and evasion, based on the most recent tax policy literature. We examine technical issues related to the enforcement of the tax, and how third-party reporting and pre-filled declarations could be used to optimize measurement of taxable wealth and minimize evasion and avoidance opportunities. Finally, we explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth. |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03131182&r=all |