Tax evasion, inequality, and progressive taxes : a political economy perspective

The standard approach to tax compliance applies the economics-of-crime methodology pioneered by Becker (1968): in its first application, due to Allingham and Sandmo (1972) it models the behaviour of agents as a decision involving a choice of the extent of their income to report to tax authorities, given a certain institutional environment, represented by parameters such as the probability of detection and penalties in the event the agent is caught. While this basic framework yields important insights on tax compliance behavior, it has some critical limitations. Specifically, it indicates a level of compliance that is significantly below what is observed in the data. This thesis revisits the original framework with a view towards addressing this issue, and examining the political economy implications of tax evasion for progressivity in the tax structure. The approach followed involves building a macroeconomic, dynamic equilibrium model for the purpose of examining these issues, by using a step-wise model building procedure starting with some very simple variations of the basic Allingham and Sandmo construct, which are eventually integrated to a dynamic general equilibrium overlapping generations framework with heterogeneous agents. One of the variations involves incorporating the Allingham and Sandmo construct into a two-period model of a small open economy of the type originally attributed to Fisher (1930). A further variation of this simple construct involves allowing agents to initially decide whether to evade taxes or not. In the event they decide to evade, the agents then have to decide the extent of income or wealth they wish to under-report. We find that the ‘evade or not’ assumption has strikingly different and more realistic implications for the extent of evasion, and demonstrate that it is a more appropriate modeling strategy in the context of macroeconomic models, which are essentially dynamic in nature, and involve consumption smoothing across time and across various states of nature. Specifically, since deciding to undertake tax evasion impacts on the consumption smoothing ability of the agent by creating two states of nature in which the agent is ‘caught’ or ‘not caught’, there is a possibility that their utility under certainty, when they choose not to evade, is higher than the expected utility obtained when they choose to evade. Furthermore, the simple two-period model incorporating an ‘evade or not’ choice can be used to demonstrate some strikingly different political economy implications relative to its Allingham and Sandmo counterpart. In variations of the two models that allow for voting on the tax parameter, we find that agents typically choose to vote for a high degree of progressivity by choosing the highest available tax rate from the menu of choices available to them. There is, however, a small range of inequality levels for which agents in the ‘evade or not’ model vote for a relatively low value of the tax rate. The final steps in the model building procedure involve grafting the two-period models with a political economy choice into a dynamic overlapping generations setting with more general, non-linear tax schedules and a ‘cost-of evasion’ function that is increasing in the extent of evasion. Results based on numerical simulations of these models show further improvement in the model’s ability to match empirically plausible levels of tax evasion. In addition, the differences between the political economy implications of the ‘evade or not’ version of the model and its Allingham and Sandmo counterpart are now very striking; there is now a large range of values of the inequality parameter for which agents in the ‘evade or not’ model vote for a low degree of progressivity. This is because, in the ‘evade or not’ version of the model, low values of the tax rate encourages a large number of agents to choose the ‘not-evade’ option, so that the redistributive mechanism is more ‘efficient’ relative to the situations in which tax rates are high. Some further implications of the models of this thesis relate to whether variations in the level of inequality, and parameters such as the probability of detection and penalties for tax evasion matter for the political economy results. We find that (i) the political economy outcomes for the tax rate are quite insensitive to changes in inequality, and (ii) the voting outcomes change in non-monotonic ways in response to changes in the probability of detection and penalty rates. Specifically, the model suggests that changes in inequality should not matter, although the political outcome for the tax rate for a given level of inequality is conditional on whether there is a large or small or large extent of evasion in the economy. We conclude that further theoretical research into macroeconomic models of tax evasion is required to identify the structural relationships underpinning the link between inequality and redistribution in the presence of tax evasion. The models of this thesis provide a necessary first step in that direction.

High level protein expression in plants through the use of a novel autonomously replicating geminivirus shuttle vector

We constructed a novel autonomously replicating gene expression shuttle vector, with the aim of developing a system for transiently expressing proteins at levels useful for commercial production of vaccines and other proteins in plants. The vector, pRIC, is based on the mild strain of the geminivirus Bean yellow dwarf virus (BeYDV-m) and is replicationally released into plant cells from a recombinant Agrobacterium tumefaciens Ti plasmid. pRIC differs from most other geminivirus-based vectors in that the BeYDV replication-associated elements were included in cis rather than from a co-transfected plasmid, while the BeYDV capsid protein (CP) and movement protein (MP) genes were replaced by an antigen encoding transgene expression cassette derived from the non-replicating A. tumefaciens vector, pTRAc. We tested vector efficacy in Nicotiana benthamiana by comparing transient cytoplasmic expression between pRIC and pTRAc constructs encoding either enhanced green fluorescent protein (EGFP) or the subunit vaccine antigens, human papillomavirus subtype 16 (HPV-16) major CP L1 and human immunodeficiency virus subtype C p24 antigen. The pRIC constructs were amplified in planta by up to two orders of magnitude by replication, while 50% more HPV-16 L1 and three- to seven-fold more EGFP and HIV-1 p24 were expressed from pRIC than from pTRAc. Vector replication was shown to be correlated with increased protein expression. We anticipate that this new high-yielding plant expression vector will contribute towards the development of a viable plant production platform for vaccine candidates and other pharmaceuticals. © 2009 Blackwell Publishing Ltd.

Use of the piggyBac transposon to create HIV-1 gag transgenic insect cell lines for continuous VLP production

Background Insect baculovirus-produced Human immunodeficiency virus type 1 (HIV-1) Gag virus-like-particles (VLPs) stimulate good humoral and cell-mediated immune responses in animals and are thought to be suitable as a vaccine candidate. Drawbacks to this production system include contamination of VLP preparations with baculovirus and the necessity for routine maintenance of infectious baculovirus stock. We used piggyBac transposition as a novel method to create transgenic insect cell lines for continuous VLP production as an alternative to the baculovirus system. Results Transgenic cell lines maintained stable gag transgene integration and expression up to 100 cell passages, and although the level of VLPs produced was low compared to baculovirus-produced VLPs, they appeared similar in size and morphology to baculovirus-expressed VLPs. In a murine immunogenicity study, whereas baculovirus-produced VLPs elicited good CD4 immune responses in mice when used to boost a prime with a DNA vaccine, no boost response was elicited by transgenically produced VLPs. Conclusion Transgenic insect cells are stable and can produce HIV Pr55 Gag VLPs for over 100 passages: this novel result may simplify strategies aimed at making protein subunit vaccines for HIV. Immunogenicity of the Gag VLPs in mice was less than that of baculovirus-produced VLPs, which may be due to lack of baculovirus glycoprotein incorporation in the transgenic cell VLPs. Improved yield and immunogenicity of transgenic cell-produced VLPs may be achieved with the addition of further genetic elements into the piggyBac integron.

An investigation into the use of human papillomavirus type 16 virus-like particles as a delivery vector system for foreign proteins: N- and C-terminal fusion of GFP to the L1 and L2 capsid proteins

Development of vaccine strategies against human papillomavirus (HPV), which causes cervical cancer, is a priority. We investigated the use of virus-like particles (VLPs) of the most prevalent type, HPV-16, as carriers of foreign proteins. Green fluorescent protein (GFP) was fused to the N or C terminus of both L1 and L2, with L2 chimeras being co-expressed with native L1. Purified chimaeric VLPs were comparable in size (∼55 nm) to native HPV VLPs. Conformation-specific monoclonal antibodies (Mabs) bound to the VLPs, thereby indicating that they possibly retain their antigenicity. In addition, all of the VLPs encapsidated DNA in the range of 6-8 kb. © 2007 Springer-Verlag.

An integrated approach to supporting land-use decisions in site redevelopment for urban renewal in Hong Kong

Urban renewal is a significant issue in developed urban areas, with a particular problem for urban planners being redevelopment of land to meet demand whilst ensuring compatibility with existing land use. This paper presents a geographic information systems (GIS)-based decision support tool (called LUDS) to quantitatively assess land-use suitability for site redevelopment in urban renewal areas. This consists of a model for the suitability analysis and an affiliated land-information database for residential, commercial, industrial, G/I/C (government/institution/community) and open space land uses. Development has occurred with support from interviews with industry experts, focus group meetings and an experimental trial, combined with several advanced techniques and tools, including GIS data processing and spatial analysis, multi-criterion analysis, as well as the AHP method for constructing the model and database. As demonstrated in the trial, LUDS assists planners in making land-use decisions and supports the planning process in assessing urban land-use suitability for site redevelopment. Moreover, it facilitates public consultation (participatory planning) by providing stakeholders with an explicit understanding of planners' views.

Community-based asylum seekers’ use of primary health care services in Melbourne

Objective: To investigate primary health care service utilisation and health presentations among asylum seekers living in Melbourne. Design and setting: Retrospective audit of files of people who attended three Melbourne asylum-seeker health clinics between 1 July 2005 and 30 June 2006. Main outcome measures: Rates of reasons for the encounter, diagnostic tests or investigations required, treatments prescribed and referrals. Results: Data were collected from 998 consultations corresponding to 341 people. Eighty-eight per cent of visits involved people with no Medicare access, owing to their visa status. The most common reasons for the encounter were general and unspecified symptoms or problems (rate, 59.9 per 100 encounters; 95% CI, 55–65), followed by musculoskeletal conditions (27.1; 95% CI, 24–30), and psychological problems (26.5; 95% CI, 23–30). The rate of referrals was 18.3 per 100 encounters (95% CI, 16–21). Conclusions: The three clinics providing services to asylum seekers in Melbourne are delivering care to a considerable number of people with complex health needs. A substantial number of asylum seekers present to clinics with psychological and social problems. Most cannot access government-subsidised health care. This must be addressed urgently by policy change at the federal and state and territory levels.

Intended and actual avoidance of road use situations by older drivers and pedestrians, by gender and age

• The Queensland context • Rationale and aims • Method • Demographics and basic data • Avoidance of driving and walking situations • Success of intended avoidance • Further analyses (preliminary results) • Implications

International tax cooperation in the Post-GFC era

Over the last five years we have observed the fallout from the global financial crisis (GFC). International cooperation and jointly adopted policies have dominated many of the solutions to the problems which have arisen. Initially, many nations in response to the GFC, implemented a two pronged short term solution by undertaking fiscal intervention and delivering rescue packages aimed at first, bailing out financial institutions and second, preventing or minimising the impact of a recession. Both programs involved large amounts of domestic spending. It was difficult in early 2007 to foresee the reduction that nations were about the face in domestic revenue collected. Five years on, not only have the first line effects of the GFC reduced the revenue raised by governments around the world, but the consequential costs associated with the rescue packages have also depleted domestic revenue bases. The response by stakeholders has been to attempt to secure domestic revenue bases through fiscally sustainable measures. Domestic sovereignty allows the levying of taxes as a nation chooses. However, rather than raise domestic taxes, revenue may also be increased by stemming the flow of income and capital to low and no-tax jurisdictions. The intervening five-year period since the GFC allows a unique insight into the response by nations and international organisations to tax evasion, tax avoidance and aggressive tax competition through the cross border flows of capital and the resulting affect that the GFC has had on international tax cooperation. By investigating the change in the international tax landscape over the last five years, which reveals the work done by stakeholders in developing fiscally responsible responses to the problems that have arisen, it may be possible to predict the trajectory of the international tax landscape over the next five years.

Assessing food insecurity : current underestimations in Australia, alternative measures and reflections on their use

Food insecurity is the limited access to, or availability of, nutritious, culturally-appropriate and safe foods, or the inability to access these foods by socially acceptable means. In Australia, the monitoring of food insecurity is limited to the use of a single item, included in the three-yearly National Health Survey (NHS). The current research comprised a) a review of the literature and available tools to measure food security, b) piloting and adaptation of the more comprehensive 16-item United States Department of Agriculture (USDA) Food Security Survey Module (FSSM), and c) a cross-sectional study comparing this more comprehensive tool, and it’s 10- and 6- item short forms, with the current single-item used in the NHS, among a sample of households in disadvantaged urban-areas of Brisbane, Australia. Findings have shown that internationally the 16-item USDA-FSSM is the most widely used tool for the measurement of food insecurity. Furthermore, of the validated tools that exist to measure food insecurity, sensitivity and reliability decline as the number of questions in a tool decreases. Among an Australian sample, the current single-measure utilised in the NHS yielded a significantly lower prevalence for food insecurity compared to the 16-item USDA-FSSM and it’s two shorter forms respectively (four and two percentage points lower respectively). These findings suggest that the current prevalence of food insecurity (estimated at 6% in the most recent NHS) may have been underestimated, and have important implications for the development of an effective means of monitoring food security within the context of a developed country.

What information-related activities do people with ESKD use?

Background Information practice is an emerging area of research that seeks to reveal how people learn to connect with the complex multimodal information landscapes that informs their ability to make decisions. Previous research has identified that people with end stage kidney disease (ESKD) tend to adopt a ‘received’ or ‘engaged’ view of information but little is known about the activities of information practice. Objectives This research project sought to identify the: i) information-related activities; and ii) how information is used. Methods Using a constructivist qualitative methodology, ten people with ESKD living in a large metropolitan city were purposively selected and interviewed. Data was subject to thematic analysis by researchers from nursing and information science. Saturation of themes was achieved. Results Participants were between 38 and 72 years, had been receiving kidney replacement therapy from 2 weeks to 31 years. Eight participants reported having access to the internet but none participated in chat rooms. The activities were conceptualized into themes as listening, seeking, searching, sharing and observing. These activities enabled people to create, reflect on and evaluate the information needed to inform their decision-making Conclusion/Application to Clinical Practice The information practice research approach will enable a better understanding of the underlying relationship between information, knowledge and experience to be better understood. For renal nurses who are involved in patient education being able to recognise the way people use information will assist in individualizing educational sessions and tailoring teaching strategies to make it more meaningful.

ACE research vignette 021 : does the use of “bricolage” make start-ups more innovative?

This series of research vignettes is aimed at sharing current and interesting research findings from our team of international Entrepreneurship researchers. In this vignette, Professor Per Davidsson and Associate Professor Paul Steffens consider the links between entrepreneurial “bricolage” and innovation.