We use matched panels from the Current Population Survey along with a grouping instrumental variables estimator to provide new estimates of the elasticity of taxable income. Our identification ...strategy exploits the fact that federal and state tax reforms over the past three decades have differentially affected cohorts across states and over time. We find that the elasticity is in the range of 0.4—0.55. The implication of our new estimates for tax policy is that the revenue-maximising tax rate is nearly 30 percentage points lower than that obtained when we use the typical identification strategy in the literature.
Human activities have led to increase in carbon dioxide emissions, and carbon tax is one of the main policy tools for reducing global emissions. This paper constructs nine scenarios considering ...different carbon tax rates and the different taxable industries to analyze the impact of Carbon Tax System (CTS) on energy, environment and the economy. We find that the negative impact of CTS on GDP is acceptable, and the maximum scenario will not exceed 0.5%. If carbon taxes are levied on energy-intensive enterprises, the impact on carbon emissions is also relatively small, even if the carbon tax rate is relatively high. Higher carbon tax rate will result in higher CO2 emission reduction and higher marginal CO2 emission reduction of CTS. The carbon tax rate follows the "law of increasing marginal emission reduction". We also argue that the focus of taxation should be on energy enterprises. It is only in this way that the efficiency of the energy market can be fully implemented to conserve energy and reduce emissions. This paper suggests that China should adopt CTS that simultaneously imposes a higher tax on energy companies and energy-intensive enterprises. This will maximize emissions reductions and have only a small impact on GDP.
•The negative impact of CTS on GDP is acceptable, and the maximum scenario will not exceed 0.5%.•The focus of carbon taxation should be on energy enterprises.•The carbon tax rate follows the "law of increasing marginal emission reduction".•China should adopt carbon tax policy that simultaneously imposes a high tax rate on energy companies and energy-intensive enterprises.
This study examines the optimal taxation in a free‐entry Cournot oligopoly using the average cost function and aggregative games approach when either a specific tax, an ad valorem tax, or both, is ...imposed. When either a specific or an ad valorem tax is imposed, we obtain the following results. First, the business‐stealing (business‐augmenting) effect in the free‐entry equilibrium makes the optimal tax rate positive (negative). Second, social welfare under the optimal specific tax is lower than that under the optimal ad valorem tax. Third, when both taxes are imposed, marginally increasing a positive ad valorem tax (negative specific tax) improves social welfare when the optimal specific (ad valorem) tax is initially imposed. Finally, the optimal combination of a specific subsidy and ad valorem tax depends on the shape of the average cost function.
Résumé
Taxation optimale dans un oligopole de Cournot à libre entrée : l'approche de la fonction du coût moyen. Cette étude examine la taxation optimale dans un oligopole de Cournot à libre entrée en se servant de l'approche de la fonction du coût moyen et des jeux agrégatifs lorsqu'une taxe spécifique, une taxe ad valorem ou les deux sont imposées. Lorsqu'une taxe spécifique ou ad valorem est imposée, nous obtenons les résultats suivants. Premièrement, l'effet de vol de commerce (augmentation de commerce) dans l'équilibre de libre entrée rend positif (négatif) le taux d'imposition optimal. Deuxièmement, le bien‐être social est plus faible avec la taxe spécifique optimale qu'avec la taxe ad valorem optimale. Troisièmement, lorsque les deux taxes sont imposées, la mise en place d'une taxe marginale ad valorem positive (taxe spécifique négative) améliore le bien‐être social lorsque la taxe spécifique (ad valorem) optimale est imposée au départ. Enfin, la combinaison optimale d'une subvention spécifique et d'une taxe ad valorem dépend de la forme de la fonction du coût moyen.
Childhood and adolescent obesity is associated with serious adverse lifetime health consequences and its prevalence has increased rapidly. Soft drink consumption has also expanded rapidly, so much so ...that soft drinks are currently the largest single contributors to energy intake. In this paper, we investigate the potential for soft drink taxes to combat rising levels of child and adolescent obesity through a reduction in consumption. Our results, based on state soft drink sales and excise tax information between 1989 and 2006 and the National Health Examination and Nutrition Survey, suggest that soft drink taxation, as currently practiced in the United States, leads to a moderate reduction in soft drink consumption by children and adolescents. However, we show that this reduction in soda consumption is completely offset by increases in consumption of other high-calorie drinks.
The incomplete devolution of taxation powers to English Local Government has been constrained by central government’s doubling of reductions in property taxes for small firms. The aim is to stimulate ...local growth, but we question the economic logic. We analyse reductions in place since 2005, with a newly linked dataset for all firms that incorporate administrative data down to local units. We find the reductions do not overcome supposed market failures, do not stimulate job growth and once we control for firm age, that the targeted small firms do not produce extra employment. Young firms and larger firms have better growth rates, but there is no systematic size effect. We conclude that the tax reductions fail because they do not account for tax capitalisation (i.e. incidence shifts from firms to property owners), the basic characteristics of the average small firm or develop a clear mechanism for change among heterogeneous economic actors.
•Preferences for leisure differ substantially across countries, detectable by looking at national accounts data through the lens of a representative-agent model•Studying labor-supply choices of ...descendants of immigrants verify the cultural interpretation of the macro-level results•“Out-of-sample” predictive power of leisure preferences on labor taxes corroborates the paper’s documented differences in preferences•Ignoring that policy choices are endogenous to underlying cultural differences — not uncommon in economics — can lead to biased results; in the case study of this paper, to a downward bias of the distortionary effects of labor taxes.
The starting point of this paper is to document considerable cross-country variation in the “labor wedge”, a common measure of labor market frictions. Its variation is theoretically isomorphic to differences in a preference-for-leisure parameter. The paper proceeds to investigate what might explain the variation. It presents three separate empirical exercises supportive of the view that, to a substantial extent, cross-sectional labor-wedge differences are capturing systematic differences in leisure preferences. Firstly, in cross-country regressions, a cultural measure of preferences for leisure, elicited from the World Values Survey, contains economically larger and statistically more robust explanatory power than do traditional measures of labor market frictions. Secondly, following the epidemiological approach, individual-level data on labor-supply choices of descendants of immigrants in the United States and Sweden line up with what an “inherited” preference for leisure would predict. Thirdly, in the spirit of an out-of-sample test, the paper looks at the implication of differences in preferences for cross-country differences in optimal labor taxation. Economic theory suggests a negative association between preferences for leisure and labor taxes; empirical data verify the theoretical prediction.
This paper aims to provide a perspective on the ideal tax system, using insights from optimal-tax theory supplemented with empirical evidence. These insights are applied to actual policy questions ...regarding the progressiveness of the labor-income tax, in-work tax credits, the design of the capital-income tax, the taxation of housing and pensions, the role of indirect taxes, optimal environmental taxes, and corrective taxes on alcohol and tobacco.
Calculating the welfare implications of changes to economic policy or shocks requires economists to decide on a normative criterion. One approach is to elicit the relevant moral criteria from ...real-world policy choices, converting a normative decision into a positive inference, as in the recent surge of “inverse-optimum” research. We find that capitalizing on the potential of this approach is not as straightforward as we might hope. We perform the inverse-optimum inference on U.S. tax policy from 1979 through 2010 and argue that the results either undermine the normative relevance of the approach or challenge conventional assumptions upon which economists routinely rely when performing welfare evaluations.
•Extend inverse-optimum approach over time in U.S., from 1979 to 2010.•Use resulting social preferences to compute social cost of inequality and recessions.•Results imply unconventionally high perceived costs of taxation or top welfare weights.
At all times, it is important to know how great the tax burden, tax pressure and severity of taxation are for the state, regions, citizens. Since the theoretical interpretation of the named concepts ...and their computational methods are ambiguous, their systemic identification and calculation is in demand. The purpose of the study is to substantiate the methodology for calculating severity of taxation and fiscal taxation for a company, industry, region, state, as well as to test the proposed methodology for calculating company’s severity of taxation in the regions of the Russian Federation. The research methodology involves the formation of a system of tax indicators; calculation and analysis of turnover severity of taxation in Russian regions by type of activity; interpretation of the results obtained. The study of severity of taxation in 2019 made it possible to identify the most successful regions in tax administration: Moscow, Chukotka Autonomous Okrug, Krasnoyarsk Territory, the Republic of Kalmykia; the Kabardino-Balkarian Republic; Novgorod Oblast. The most problematic territories include the Chechen Republic, Kemerovo Region, the Republic of Dagestan and a number of others. Federal and regional authorities should pay attention to both the listed regions and the types of economic activities with the greatest spread in the values for severity of taxation: mining, agriculture and forestry, hunting and fish farming, information activities, communications and others. In the future, it is advisable to calculate the indicator under study for a number of years; focus on the substantive study of the experience of regions and industries of leaders in severity of taxation in order to replicate their successful experience in tax administration. A promising direction is also the construction of a map of deviations for severity of taxation and the tax burden for the Russian regions from the average Russian, both in general and for specific types of activity. The ratio of fiscal and tax burdens, fiscal and tax pressure, severity of taxation and fiscal taxation deserve a more detailed empirical estimation as well.
We document gender and socioeconomic inequalities in personality over the life cycle (age 18–75), using the Big Five 2 (BFI-2) inventory linked to administrative data on a large Danish population. We ...estimate life-cycle profiles non-parametrically and adjust for cohort and sample-selection effects. We find that: (1) Women of all ages score more highly than men on all personality traits, including three that are positively associated with wages; (2) High-education groups score more favorably on Openness to Experience, Extraversion, Agreeableness, and Neuroticism than low-education groups, while there is no socioeconomic inequality by Conscientiousness; (3) Over the life cycle, gender and socioeconomic gaps remain constant, with two exceptions: the gender and SES gaps in Openness to Experience widen, while gender differences in Neuroticism, a trait associated with worse outcomes, diminish with age. We discuss the implications of these findings in the context of gender wage gaps, household production models, and optimal taxation.
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