|
on Public Finance |
| By: | Katharina Pfeil; Matthias Kasper; Sarah Necker; Lars P. Feld |
| Abstract: | This study examines how tax system design and reform affect labor supply. We conduct an online experiment with 522 participants to assess labor responses to tax reforms that introduce or remove a notch, affecting after-tax income at either the lower or upper end of the income distribution. Our findings indicate asymmetric responses to tax reform as well as substantial heterogeneity at the individual level. In particular, we find an increase in labor supply in response to a tax reform only when the reform reduces the tax burden at the upper end of the income distribution. While, in the aggregate, labor supply adjusts on the extensive and intensive margins, we also find strong evidence of heterogeneity in individual responses, showing that the labor response is primarily driven by individuals directly affected by the reform. We examine the role of misperceptions at the individual level as well as fairness considerations in explaining these results. |
| Keywords: | tax system design, tax reform, notches, labor supply, online experiment |
| JEL: | J20 J22 H24 H30 C91 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11350 |
| By: | Christl, Michael; De Poli, Silvia; Köppl-Turyna, Monika |
| Abstract: | This paper refines the concept of disposable income by incorporating governmentprovided in-kind benefits for education and health services, as well as imputed VAT payments, following Figari and Paulus (2015). Our analysis reveals that including these elements significantly reduces income inequality, as seen in a decrease in the Gini coefficient across all examined countries. While direct taxes and cash benefits are the main drivers of redistribution, in-kind benefits also play a substantial role, while VAT having a smaller, negative impact. Our study highlights that additionally extending the income concept increases also the targeting of the tax benefit system to low-income households, however to a very different extend across the EU Member States. Our new, broader approach allows for more accurate assessments of redistribution and cross-country comparisons, offering valuable insights for EU-level policy evaluations. |
| Keywords: | tax-benefits model, EUROMOD, welfare state, in-kind benefits, indirect taxes, redistribution |
| JEL: | H23 I38 H24 D31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1508 |
| By: | David R. Agrawal; Marie-Laure Breuillé; Julie Le Gallo |
| Abstract: | We study local tax competition when municipalities can voluntarily cooperate. We compare the intensity of interjurisdictional policy interdependence between competing municipalities within the same “establishment for inter-municipal cooperation” (EIMC) and competing municipalities outside of the cooperative unit. To resolve the endogeneity of the decision to cooperate we apply the approach of Kelejian and Piras (2014). The strategic response to the average tax rate among peer members of the same EIMC is less intense than the response to the average tax rate of municipalities outside of the cooperative unit. A one percentage point decrease in the average tax rate of non-members lowers the own-jurisdiction tax rate by 0.58 percentage points, while a one unit decrease in the tax rate of towns within the EIMC lowers the own-jurisdiction rate by 0.31 percentage points. Our empirical methods can be used to study strategic interactions within other cooperative groups, including supra-national institutions such as the European Union. |
| Keywords: | tax competition, intermunicipal cooperation, spatial autoregressive models, endogenous weight matrix, local public finance, networks |
| JEL: | C20 H20 H70 R50 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11334 |