This essay describes and evaluates state and local business tax incentives in the United States. In 2014, states spent between 5 USD and 216 USD per capita on incentives for firms in the form of ...firm-specific subsidies and general tax credits, which mostly target investment, job creation, and research and development. States with higher per capita incentives tend to have higher state corporate tax rates. Recipients of firm-specific incentives are usually large establishments in manufacturing, technology, and high-skilled service industries, and the average discretionary subsidy is 178M USD for 1,500 promised jobs. Firms tend to accept subsidy deals from places that are richer, larger, and more urban than the average county, and poor places provide larger incentives and spend more per job. Comparing winning and runner-up locations for each deal, we find that average employment within the three-digit industry of the deal increases by roughly 1,500 jobs. While we find some evidence of direct employment gains from attracting a firm, we do not find strong evidence that firm-specific tax incentives increase broader economic growth at the state and local level.
This article provides a review of global energy subsidies—of definitions and estimation techniques, their type and scope, their drawbacks, and effective ways to reform them. Based on an assessment of ...both policy reports and peer-reviewed studies, this article presents evidence that energy subsidies could reach into the trillions of dollars each year. It also highlights how most subsidies appear to offer net costs to society, rather than benefits, in the form of government deficits, increased waste, shortages of energy fuels, and aggravated environmental impacts, among others. The review then talks about how tools such as best practices in measurement and estimation, subsidy elimination, impact studies, and adjustment packages can dramatically reorient subsidies so that they become more socially and environmentally sustainable. It also argues that such efforts need to explicitly learn from previous successes and recognize the importance of political economy, the possible winners and losers to subsidy reform. The final part proposes a future research agenda.
Across sub-Saharan Africa agricultural subsidy programs have again become a common strategy for combatting rural poverty, increasing agricultural production, and reducing food insecurity. Despite a ...large literature examining subsidies’ effects on output and welfare, little is known about their political effects. This paper examines Malawi’s Agricultural Input Subsidy Programme, one of the largest and most expensive programs implemented, which was launched by the government in 2005. We examine whether the incumbent party, the Democratic Progressive Party headed by president Bingu wa Mutharika, benefited from Malawi’s subsidy program by examining a longitudinal dataset of 1,846 rural Malawians interviewed in 2008 and again in 2010. The individual-level data show no evidence that the subsidy program was targeted to Mutharika’s co-ethnics or co-partisans. Our analysis further demonstrates that the subsidy program increased support for the incumbent party. These results suggest that even when parties are unable or unwilling to target distributional programs at the local level, they may nonetheless derive political benefits. As anti-poverty programs—including agricultural subsidies to small-scale farmers—become increasingly common across the continent, our results suggest that they may help to explain patterns of party affiliation and vote choice, particularly where traditional patterns of partisan affiliation related to ethnic or regional identities are weak.
•Formulateduopoly competition between two heterogeneous ride-sourcing platforms.•Considerasset-lightandasset-heavy strategiesin the ride-sourcing market.•Develop generalized waiting time cost ...function with increasing returns to scale.•Deriveoptimal pricing strategies with adoption of EVs under competition equilibrium.•Propose an optimization modelfor the determination of optimal subsidy strategies.•Suggest government coordinate subsidies on the EVs purchase and charging stations.
This paper formulates duopoly competition between two non-cooperative heterogeneous ride-sourcing platforms considering the adoption of electric vehicles (EV) and government subsidies on EVs. One ride-sourcing platform adopts an EV asset-heavy strategy by undertaking EV depreciation costs, while the other ride-sourcing platform adopts an asset-light strategy by hiring drivers who own vehicles. The first-order conditions of each platform's pricingunder competitive equilibrium are derived based on a game-theoretical model that involves the stakeholders (i.e., riders, drivers, and ride-sourcing platforms). Based on the modeling framework ofduopoly competition between two heterogeneous ride-sourcing platforms, this paper proposes an optimization model with social welfare maximization for the determination of governmentsubsidy strategies. We conduct numerical illustrations to demonstrate how governmental subsidies on EV purchase and charging stations impact the endogenous variables in equilibrium (e.g., price for riders, wage for drivers, and market share for each platform) under different formulations of riders' waiting time cost function, which are increasing returns to scale. Also, a specialmodel with a fixed commission ratio is discussed. The results provide suggestions for decision-makers on how to allocate subsidy within the budget constraint.
Most countries have automatic rules in their tax-and-transfer systems that are partly intended to stabilize economic fluctuations. This paper measures their effect on the dynamics of the business ...cycle. We put forward a model that merges the standard incomplete-markets model of consumption and inequality with the new Keynesian model of nominal rigidities and business cycles, and that includes most of the main potential stabilizers in the U.S. data and the theoretical channels by which they may work. We find that the conventional argument that stabilizing disposable income will stabilize aggregate demand plays a negligible role in the dynamics of the business cycle, whereas tax-and-transfer programs that affect inequality and social insurance can have a larger effect on aggregate volatility. However, as currently designed, the set of stabilizers in place in the United States has had little effect on the volatility of aggregate output fluctuations or on their welfare costs despite stabilizing aggregate consumption. The stabilizers have a more important role when monetary policy is constrained by the zero lower bound, and they affect welfare significantly through the provision of social insurance.
China has made great efforts to control energy consumption and reduce environmental pressure in recent decades. In the residential sector, the dramatic increase in the ownership of household ...appliances has driven the growth of electricity consumption, which calls for effective energy-saving policies. In this study, we exemplified the sales of refrigerators in Beijing, aiming to evaluate the effectiveness of current subsidy policies for stimulating the purchase of energy-efficient household appliances. In specific, we first selected ten pairs of refrigerators from six brands having similar functions, however different in their energy efficiency grades (EEG). By applying a combination of net present value (NPV) difference method and Conversion Method of Electrical Engineering Coefficient, we calculated and compared the changes in the NPV difference and dynamic investment payback period (DIPP) to evaluate the effectiveness of the policy. The results revealed that economic benefits were mainly generated in EEG2; thereby we suggest that the government can cancel subsidies for EEG2 refrigerators, and increase the subsidy amount for EGG1 refrigerators at a potential rate of 24% in the future.
•China's energy-saving subsidy policy does not reduce the purchasing price for refrigerators.•Refrigerators at EEG2 have higher economic benefits than EEG1 ones regardless the subsidy policy.•The influence of the policy on purchasing preference is depended on the products' service life.•Government needs to adjust the weight of subsidy at different levels to improve policy efficiency.
This study investigates how government policies affect firm-level innovation. To empirically test this relationship, we use panel data for the Korean renewable energy technology firms. Taking into ...account the results of various panel framework tests and sample size, we establish a panel vector autoregressive model in the first difference, and use a bias-corrected least squares dummy variable estimator to test complex dynamic relationships between public subsidies, firm heterogeneities (size, age, and slack), industry dynamic competition, and innovation. Based on the estimations, we find that there is a positive bidirectional causal relationship between firms’ innovation and each of the following: research and development (R&D) subsidy, available organizational slack, and industry dynamic competition. Non-R&D subsidy, firm size, and age do not have significant direct effects on firm-level innovation. However, non-R&D subsidy is involved in the relationship between R&D subsidy and firms’ innovation. We discuss some implications based on the findings of this study.
•We study how policy affects innovation in Korean renewable energy technology firms.•Firm innovation and R&D subsidy have a positive bidirectional causal relationship.•The same holds for firm innovation and available organizational slack.•The same holds for firm innovation and industry dynamic competition.•Non-R&D subsidy mediates the R&D subsidy–firm innovation relationship.
Using new cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in France, Italy, Sweden, the United Kingdom, ...and the United States. Americans are more optimistic than Europeans about social mobility. Our randomized treatment shows pessimistic information about mobility and increases support for redistribution, mostly for “equality of opportunity” policies. We find strong political polarization. Left-wing respondents are more pessimistic about mobility: their preferences for redistribution are correlated with their mobility perceptions; and they support more redistribution after seeing pessimistic information. None of this is true for right-wing respondents, possibly because they see the government as a “problem” and not as the “solution.”
Taxing Our Wealth Scheuer, Florian; Slemrod, Joel
The Journal of economic perspectives,
01/2021, Letnik:
35, Številka:
1
Journal Article
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This paper evaluates proposals for an annual wealth tax. While a dozen OECD countries levied wealth taxes in the recent past, now only three retain them, with only Switzerland raising a comparable ...fraction of revenue as recent proposals for a US wealth tax. Studies of these taxes sometimes, but not always, find a substantial behavioral response, including of saving, portfolio change, avoidance, and evasion, and the impact depends crucially on design features, especially the broadness of the base and enforcement provisions. Because the US proposals are very different from any previous wealth tax, experience in other countries offers only broad lessons, but we can gain insights from closely related taxes, such as the property and the estate tax, and from optimal tax analysis of the role of wealth taxation.
Programmes supporting the installation of energy efficiency measures typically incur a cost in the form of subsidies as well as lost VAT income due to reduced energy consumption. Those costs are to ...some extent offset by the tax receipts and other revenue streams generated as a result of the activities promoted under the programme. In this paper we analyse the budgetary effects of energy efficiency programmes focusing on the example of solid wall insulation in the UK. Three distinct subsidy options have been defined and modelled for the purpose of this research including two policies with varying degrees of direct subsidy and a low interest loan scheme. Our analysis shows that a significant amount of the cost of a scheme funding solid wall insulation would be offset by increased revenues and savings. A loan scheme, due to the high leverage, achieves not only budget neutrality but generates additional revenue for the Exchequer.
•First assessment of fiscal effects of subsidising energy efficiency technologies in the UK.•Contribution to debate around wider benefits of funding energy efficiency.•Original economic modelling.
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