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on Public Finance |
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Issue of 2024‒04‒01
seven papers chosen by |
| By: | Casi, Elisa (Dept. of Business and Management Science, Norwegian School of Economics); Lisowsky, Petro (Questrom School of Business, Boston University); Stage, Barbara M. B. (WHU - Otto Beisheim School of Management); Todtenhaupt, Maximilian (Institute of Public Finance, Leibniz University Hannover) |
| Abstract: | We examine the effect of business model digitalization on competition and how corporate tax savings through digitalization may augment this relationship. Global policymakers express concern that digitalization-related tax savings unfairly benefit the competitive standing of rival firms over their competitors. Using textual analysis techniques to identify firms’ business models, we show that rivals’ adoption of a digital business model leads to negative economic effects on the performance of their non-digitalizing competitors. We estimate that a one standard deviation increase in the share of digitalized rivals in a market reduces a competitor’s market share by 4.6%. Suggesting significant tax savings from digitalizing, we also find that digitalizing rivals substantially reduce their effective tax rates, mostly by increased use of tax havens. However, when we test whether the detected competitive externalities vary depending on the share of digitalizing rivals with versus without substantial digitalization-related tax savings, we find the economic magnitudes of their effects are quantitatively similar. Therefore, contrary to policymakers’ concerns of digitalization-related tax savings unfairly shaping competition, our findings suggest that tax savings from digitalization is not a key driver of altering competition between digitalized and non-digitalized firms. |
| Keywords: | Digital; Tax; Product Market; Competition; Business Model |
| JEL: | D40 H25 H26 L22 O33 |
| Date: | 2024–03–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2024_006&r=pub |
| By: | Gabriel Chodorow-Reich; Matthew Smith; Owen M. Zidar; Eric Zwick |
| Abstract: | We evaluate the 2017 Tax Cuts and Jobs Act. Combining reduced-form estimates from tax data with a global investment model, we estimate responses, identify parameters, and conduct counterfactuals. Domestic investment of firms with the mean tax change increases 20% versus a no-change baseline. Due to novel foreign incentives, foreign capital of U.S. multinationals rises substantially. These incentives also boost domestic investment, indicating complementarity between domestic and foreign capital. In the model, the long-run effect on domestic capital in general equilibrium is 7% and the tax revenue feedback from growth offsets only 2p.p. of the direct cost of 41% of pre-TCJA corporate revenue. |
| JEL: | E22 F21 F23 H0 H25 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32180&r=pub |
| By: | Odran Bonnet (Insee); Etienne Fize (Institut des Politiques Publiques, Paris School of Economics); Tristan Loisel (Insee, Crest); Lionel Wilner (Insee, Crest) |
| Abstract: | This article exploits both the crude oil price surge consecutive to the invasion of Ukraine and 2022 fuel excise tax rebates in France as quasi-natural experiments to infer the price sensitivity of fuel demand. Based on granular individual bank account data at the transaction level, we properly disentangle anticipation effects from price effects, and estimate an average price elasticity of -0.31. It varies little with respect to income and location but substantially decreases, in absolute, with respect to fuel spending and is higher for retirees. We evaluate financial and distributional effects of the actual tax policy as well as its impact on CO2 emissions based on counterfactual simulations. We empirically demonstrate that resorting to transfers, be they targeted or not, achieves only imperfect compensation against fuel inflation. However, we show that a policy maker subject to a tight budget constraint and seeking to alleviate excessive losses, relative to income, prefers means-tested transfers to rebates. |
| Keywords: | Commodity taxation; Excise tax; Tax-and-transfer schemes; Fuel price elasticity; Anticipatory behavior; Transaction-level data. |
| JEL: | C18 C51 D12 H23 H31 L71 Q31 Q35 Q41 |
| Date: | 2024–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:crs:wpaper:2024-05&r=pub |
| By: | Ernst, Ekkehard,; Langot, François,; Merola, Rossana,; Tripier, Fabien, |
| Abstract: | Out of four major structural changes affecting the US economy – namely a rising share of skilled workers, skill-biased technological change, decreasing progressiveness of taxation and productivity slowdown – we show that the decline in productivity growth not only is the main driver of the widening wealth disparities observed in the United States of America over the past few decades, but is also the only mechanism that can explain inequalities both within and between skill groups. |
| Keywords: | wealth, economic disparity |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:995353092902676&r=pub |
| By: | Maxim Pinkovskiy; Xavier Sala-i-Martin; Kasey Chatterji-Len; William H. Nober |
| Abstract: | Household surveys suffer from persistent and growing underreporting. We propose a novel procedure to adjust reported survey incomes for underreporting by estimating a model of misreporting whose main parameter of interest is the elasticity of regional national accounts income to regional survey income, which is closely related to the elasticity of underreporting with respect to income. We find this elasticity to be substantial but roughly constant over time, implying a large but relatively constant correction to survey-derived inequality estimates. Underreporting of income by the bottom 50% of the world income distribution has become particularly important in recent decades. We reconfirm the findings of the literature that global poverty and inequality have declined dramatically between 1980 and 2019. Finally, we find that within-country inequality is falling on average, and has been largely constant since the 1990s. |
| JEL: | C83 D31 D33 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32203&r=pub |
| By: | Melanie Marten (Université de Cergy-Pontoise, THEMA) |
| Abstract: | This paper investigates the impact of a 2016 electricity tax reform on French manufacturing using micro-panel data spanning eight years. The reform intro- duced a tax reduction on electricity use contingent on gross electricity tax liabil- ity exceeding 0.5% of firm value-added. Firms that satisfy the threshold criteria are considered electro-intensive. This paper exploits a Differences-in-Differences (DiD) event study specification to estimate the effect of the tax cut relative to inel- igible firms. On average, electro-intensive firms experienced a relative drop in in their average electricity costs ranging between 8.5% and 12.4% in the post-reform period. Findings also uncover heterogeneous effects across manufacturing sectors. Nevertheless, results do not indicate that the reform had a significant or robust im- pact on either energy use input choice or on economic performance. |
| Keywords: | Electricity tax, Policy Evaluation, Manufacturing, France |
| JEL: | Q48 L5 L6 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2024-02&r=pub |
| By: | Samuel Bryson; Evaristo Mwale; Kwabena Adu-Ababio |
| Abstract: | This paper explores two policy interventions in Zambia, a minimum wage hike in 2018 and an upward revision in the first kink in the progressive income tax schedule in 2017, to examine and compare the impact of minimum wage and tax kink changes on wages and the earnings distribution in the formal and informal sectors. The analysis builds on two thus far separate strands of literature that investigate the effects of minimum wages and bunching around tax kinks in developing countries using Zambian personal income tax data and data from the ILO Labour Force Surveys over the period 2012-21. |
| Keywords: | Personal income tax, Minimum wage, Informality, Zambia |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-10&r=pub |