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.

The inherent international tax regime and its constraints on Australia's sovereignty

Neither an international tax, nor an international taxing body exists. Rather, there are domestic taxing rules adopted by jurisdictions which, coupled with double tax treaties, apply to cross-border transactions and international taxation issues. International bodies such as the OECD and UN, which provide guidance on tax issues, often steer and supplement these domestic adoptions but have no binding international taxing powers. These pragmatic realities, together with the specific use of the word ‘regime’ within the tax community, lead many to argue that an international tax regime does not exist. However, an international tax regime should be defined no differently to any other area of international law and when we step outside the confines of tax law to consider the definition of a ‘regime’ within international relations it is possible to demonstrate that such a regime is very real. The first part of this article, by defining an international tax regime in a broader and more traditional context, also outlining both the tax policy and principles which frame that regime, reveals its existence. Once it is accepted that an international tax regime exists, it is possible to consider its adoption by jurisdictions and subsequent constraints it places on them. Using the proposed changes to transfer pricing laws as the impetus for assessing Australia’s adoption of the international tax regime, the constraints on sovereignty are assessed through a taxonomy of the level adoption. This reveals the subsequent constraints which flow from the broad acceptance of an international tax regime through to the specific adoption of technical detail. By undertaking this analysis, the second part of this article demonstrates that Australia has inherently adopted an international tax regime, with a move towards explicit adoption and a clear embedding of its principles within the domestic tax legislation.

How should Australia regulate voluntary euthanasia and assisted suicide?

The purpose of this paper is to provide a basis from which to start an informed and rational dialogue in Australia about voluntary euthanasia (VE) and assisted suicide (AS). It does this by seeking to chart the broad landscape of issues that can be raised as relevant to how this conduct should be regulated by the law. It is not our purpose to persuade. Rather, we have attempted to address the issues as neutrally as possible and to canvass both sides of the argument in an even-handed manner. We hope that this exercise places the reader in a position to consider the question posed by this paper: How should Australia regulate voluntary euthanasia and assisted suicide? In line with the approach taken in the paper, this question does not take sides in the debate. It simply asks how VE and AS should be regulated, acknowledging that both prohibition and legalisation of such conduct involve regulation. We begin by considering the wider legal framework that governs end of life decision-making. Decisions to withhold or withdraw life-sustaining treatment that result in a person’s death can be lawful. This could be because, for example, a competent adult refuses such treatment. Alternatively, stopping or not providing treatment can be lawful when it is no longer in a person’s best interests to receive it. The law also recognises that appropriate palliative care should not attract criminal responsibility. By contrast, VE and AS are unlawful in Australia and could lead to prosecution for crimes such as murder, manslaughter or aiding and abetting suicide. But this is not to say that such conduct does not occur in practice. Indeed, there is a body of evidence that VE and AS occur in Australia, despite them being unlawful. There have been repeated efforts to change the law in this country, mainly by the minor political parties. However, apart from a brief period when VE and AS was lawful in the Northern Territory, these attempts to reform the law have been unsuccessful. The position is different in a small but increasing number of jurisdictions overseas where such conduct is lawful. The most well known is the Netherlands but there are also statutory regimes that regulate VE and/or AS in Belgium and Luxembourg in Europe, and Oregon and Washington in the United States. A feature of these legislative models is that they incorporate review or oversight processes that enable the collection of data about how the law is being used. As a result, there is a significant body of evidence that is available for consideration to assess the operation of the law in these jurisdictions and some of this is considered briefly here. Assisting a suicide, if done for selfless motives, is also legal in Switzerland, and this has resulted in what has been referred to as ‘euthanasia tourism’. This model is also considered. The paper also identifies the major arguments in favour of, and against, legalisation of VE and AS. Arguments often advanced in favour of law reform include respect for autonomy, that public opinion favours reform, and that the current law is incoherent and discriminatory. Key arguments against legalising VE and AS point to the sanctity of life, concerns about the adequacy and effectiveness of safeguards, and a ‘slippery slope’ that will allow euthanasia to occur for minors or for adults where it is not voluntary. We have also attempted to step beyond these well trodden and often rehearsed cases ‘for and against’. To this end, we have identified some ethical values that might span both sides of the debate and perhaps be the subject of wider consensus. We then outline a framework for considering the issue of how Australia should regulate VE and AS. We begin by asking whether such conduct should be criminal acts (as they presently are). If VE and AS should continue to attract criminal responsibility, the next step is to enquire whether the law should punish such conduct more or less than is presently the case, or whether the law should stay the same. If a change is favoured as to how the criminal law punishes VE and AS, options considered include sentencing reform, creating context-specific offences or developing prosecutorial guidelines for how the criminal justice system deals with these issues. If VE and AS should not be criminal acts, then questions arise as to how and when they should be permitted and regulated. Possible elements of any reform model include: ensuring decision-making is competent and voluntary; ascertaining a person’s eligibility to utilise the regime, for example, whether it depends on him or her having a terminal illness or experiencing pain and suffering; and setting out processes for how any decision must be made and evidenced. Options to bring about decriminalisation include challenging the validity of laws that make VE and AS unlawful, recognising a defence to criminal prosecution, or creating a statutory framework to regulate the practice. We conclude the paper where we started: with a call for rational and informed consideration of a difficult and sensitive issue. How should Australia regulate voluntary euthanasia and assisted suicide?

Political selection and the relative age effect

In this paper we present substantial evidence for the existence of a bias in the distribution of births of leading US politicians in favor of those that have been the oldest in their cohort at school. This “relative age effect” has been proven to influence performance at school and in sports,but evidence on its impact on people’s vocational success has been rare. We find a marked break in the density of birthdate of politicians using a maximum likelihood test and McCrary’s (2008) nonparametric test. We conjecture that being relatively old in a peer group may create long term advantages which can create a significant role in the ability to succeed in a highly competitive environment like the race for top political offices in the USA. The magnitude of the effect we estimate is larger than what most other studies on the relative age effect for a broader (adult) population find, but is in general in line with studies that look at populations in high-competition environments.

The exemplification of governance principles within state asset management laws and policies : the case of Indonesia

This chapter reviews aspects of the challenge of reviewing and reforming Indonesian practice within state asset management law and policy specifically related to public housing, public buildings, parklands, and vacant land. A critical issue in beginning this review is how Indonesia currently conceptualizes the notion of asset governance and how this meaning is embodied in recent changes in law and policy and importantly in options for future change. This chapter discusses the potential complexities uniquely Indonesian characteristics such as decentralisation and regional autonomy regime, political history, and bureaucratic culture.

The social mechanism of political deliberation and citizen participation in Guangdong China

Many studies have focused on why deliberative institutions should be established in order to develop Chinese people’s citizenry skills; however few focus on the social conditions and public sentiments that shape the development of deliberative mechanisms. Skills and awareness of citizenry is not only brought into being by deliberative institutions that are set up by the government, but evolve through interplays between technologies and social changes. As a test-bed for economic reform Guangdong is increasingly identified by translocality and hybrid culture. This is framed by identity conflict and unrests, much of which is due to soaring wealth polarisation, high volumes of population movement, cultural collisions and ongoing linguistic contestations. These unrests show the region’s transformation goes beyond the economic front. Profound changes are occurring at what anthropologists and philosophers call the changing social conciseness or moral landscape (Ci, 1994; Yan, 2010). The changing social moralities are a reflection of the awareness of individuals’ rights and responsibilities, and their interdependencies from dominant ideologies. This paper discusses Guangdong’s social and cultural characteristics, and questions how existing social conditions allow the staging of political deliberation by facilitating political engagement and the formation of public opinion. The paper will investigate the tragedy of Xiao Yueyue in Foshan, Guangdong, where ‘right’ and ‘responsibility’, ‘self’ and ‘other’ define the public sentiments of deliberation and participation.

Child rearing Inc : On the perils of political paralysis Down Under

In his 2007 PESA keynote address, Paul Smeyers discussed the increasing regulation of child-rearing through government intervention and the generation of “experts,” citing particular examples from Europe where cases of childhood obesity and parental neglect have stirred public opinion and political debate. In his paper (this issue), Smeyers touches on a number of tensions before concluding that child rearing qualifies as a practice in which liberal governments should be reluctant to intervene. In response, I draw on recent experiences in Australia and argue that certain tragic events of late are the result of an ethical, moral and social vacuum in which these tensions coalesce. While I agree with Smeyers that governments should be reluctant to “intervene” in the private domain of the family, I argue that there is a difference between intervention and support. In concluding, I maintain that if certain Western liberal democracies did a more comprehensive job of supporting children and their families through active social investment in primary school education, then both families and schools would be better equipped to deal with the challenges they now face.

The exemplification of governance principles within state asset management laws and policies : the case of Indonesia

Efficient state asset management is crucial for governments as they facilitate the fulfillment of their public functions, which include the provision of essential services and other public administration support. In recent times economies internationally and particularly in South east Asia, have displayed increased recognition of the importance of efficiencies across state asset management law, policies and practice. This has been exemplified by a surge in notable instances of reform in state asset management. A prominent theme in this phenomenon is the consideration of governance principles within the re-conceptualization of state asset management law and related policy, with many countries recognizing variability in the quality of asset governance and opportunities for profit as being critical factors. This issue is very current in Indonesia where a major reform process in this area has been confirmed by the establishment of a new Directorate of State Asset Management. The incumbent Director-General of State Asset Management has confirmed a re-emphasis on adherence to governance principles within applicable state asset management law and policy reform. This paper reviews aspects of the challenge of reviewing and reforming Indonesian practice within state asset management law and policy specifically related to public housing, public buildings, parklands, and vacant land. A critical issue in beginning this review is how Indonesia currently conceptualizes the notion of asset governance and how this meaning is embodied in recent changes in law and policy and importantly in options for future change. This paper discusses the potential complexities uniquely Indonesian characteristics such as decentralisation and regional autonomy regime, political history, and bureaucratic culture.

Opportunities for forest finance under the International climate change regime

The international climate change regime has the potential to increase revenue available for forest restoration projects in Commonwealth nations. There are three mechanisms which could be used to fund forest projects aimed at forest conservation, forest restoration and sustainable forest management. The first forest funding opportunity arises under the clean development mechanism, a flexibility mechanism of the Kyoto Protocol. The clean development mechanism allows Annex I parties (industrialised nations) to invest in emission reduction activities in non-Annex 1 (developing countries) and the establishment of forest sinks is an eligible clean development mechanism activity. Secondly, parties to the Kyoto Protocol are able to include sustainable forest management activities in their national carbon accounting. The international rules concerning this are called the Land-Use, Land-Use Change and Forestry Guidelines. Thirdly, it is anticipated that at the upcoming Copenhagen negotiations that a Reduced Emissions from Deforestation and Degradation (REDD) instrument will be created. This will provide a direct funding mechanism for those developing countries with tropical forests. Payments made under a REDD arrangement will be based upon the developing country with tropical forest cover agreeing to protect and conserve a designated forest estate. These three funding options available under the international climate change regime demonstrate that there is potential for forest finance within the regime. These opportunities are however hindered by a number of technical and policy barriers which prevent the ability of the regime to significantly increase funding for forest projects. There are two types of carbon markets, compliance carbon markets (Kyoto based) and voluntary carbon markets. Voluntary carbon markets are more flexible then compliance markets and as such offer potential to increase revenue available for sustainable forest projects.

State asset management reform in Indonesia : a wicked problem

Efficient state asset management is crucial for government departments that rely on the operations of their state assets in order to fulfil their public functions, which include public service provision and others. These assets may be expensive, extensive and or, complex, and can have a major impact on the ability of governments to perform its function over extended periods. Various governments around the world have increasingly recognised the importance of an efficient state asset management laws, policies, and practices; exemplified by the surge in state asset management reform. This phenomenon is evident in Indonesia, in particular through the establishment of the Directorate General of State Assets in 2006, who was appointed as the ultimate state asset manager (of Republic of Indonesia) and the proprietor of state asset management reform. The Directorate General of State Assets too has pledged its adherence to good governance principles within its state asset management laws and policies reform. However the degree that good governance principles are conceptualised is unknown, resulting in questions of how and to what extent is good governance principles evident within Indonesia's reformed state asset management laws and policies. This study seeks to understand the level of which good governance principles are conceptualised and understood within reformed state asset management policies in Indonesia (as a case study), and identify the variables that play a role in the implementation of said reform. Although good governance improvements has been a central tenet in Indonesian government agenda, and state asset management reform has propelled in priority due to found neglect and unfavourable audit results; there is ambiguity in regards to the extent that good governance is conceptualised within the reform, how and whether this relationship is understood by state asset managers (i.e government officials), and what (and how) other variables play a supporting and/or impeding role in the reform. Using empirical data involving a sample of four Indonesian regional governments and 70 interviews; discrepancy in which good governance principles are conceptualised, the level it is conceptualised, at which stage of state asset management practice it is conceptualised, and the level it is understood by state asset managers (i.e government officials) was found. Human resource capacity and capability, the notion of 'needing more time', low legality, infancy of reform, and dysfunctional sense of stewardship are identified as specific impeding variables to state asset management reform; whilst decentralisation and regional autonomy regime, political history, and culture play a consistent undercurrent key role in good governance related reforms within Indonesia. This study offers insights to Indonesian policy makers interested in ensuring the conceptualisation and full implementation of good governance in all areas of governing, particularly within state asset management practices. Most importantly, this study identifies an asymmetry in good governance understanding, perspective, and assumptions between policy maker (i.e high level government officials) and policy implementers (i.e low level government officials); to be taken into account for future policy evolvements and/or writing. As such, this study suggests the need for a modified perspective and approach to good governance conceptualisation and implementation strategies, one that acknowledges and incorporates a nation's unique characteristics and no longer denies the double-edged sword of simplified assumptions of governance.

Militarism and International Relations : Political economy, security, theory, edited by Anna Stavrianakis and Jan Selby, Abingdon, Routledge, 2012, 212 pp., £80.00 (hardback), ISBN 978-0-415-61491-7

An engaging narrative is maintained throughout this edited collection of articles that address the issue of militarism in international relations. The book seamlessly integrates historical and contemporary perspectives on militarism with theory and relevant international case studies, resulting in a very informative read. The work is comprised of three parts. Part 1 deals with the theorisation of militarism and includes chapters by Anna Stavrianakis and Jan Selby, Martin Shaw, Simon Dalby, and Nicola Short. It covers a range of topics relating to historical and contemporary theories of militarism, geopolitical threat construction, political economy, and the US military’s ‘cultural turn’.

Reflexive professionalism : reclaiming the voice of authority in shaping the discourses of education policy

The nature and value of ‘professionalism’ has long been contested by both producers and consumers of policy. Most recently, governments have rewritten and redefined professionalism as compliance with externally imposed ‘standards’. This has been achieved by silencing the voices of those who inhabit the professional field of education. This paper uses Foucauldian archaeology to excavate the enunciative field of professionalism by digging through the academic and institutional (political) archive, and in doing so identifies two key policy documents for further analysis. The excavation shows that while the voices of (academic) authority speak of competing discourses emerging, with professional standards promulgated as the mechanism to enhance professionalism, an alternative regime of truth identifies the privileged use of (managerial) voices from outside the field of education to create a discourse of compliance. There has long been a mismatch between the voices of authority on discourses around professionalism from the academic archive and those that count in contemporary and emerging Australian educational policy. In this paper, we counter this mismatch and argue that reflexive educators’ regimes of truth are worthy of attention and should be heard and amplified.

The political economy of food in schools : the case of Queensland State education

Food in schools is typically understood from a biomedical perspective. At practical, ideational and material levels, whether addressed pedagogically or bureaucratically, food in schools is generally considered from a natural sciences perspective. This perspective manifests as the bioenergetic principle of energy in versus energy out and appears in policy focused on issues such as obesity and physical activity. Despite the considerable literature on the sociology of food and eating, little is understood about food in schools from a sociological perspective. This oversight of one of the most fundamental requirements of the human condition--namely, food--should be of concern for educators. Investigating food through a political economy lens means understanding food in schools as part of broader economic, political, social and cultural conditions. Hence, a political economy of food and schooling is concerned with the formation of ideas about food relative to political, economic, and cultural ideologies in social practice. From a critical sociology study of food messages students receive in the primary school curriculum, this paper reports on some of the official food messages of an Australian state's education policy, as a case to highlight the current political economy of food in Australia. It examines the role of the corporate food industry in the formation of Australian food policy and how that policy created artefacts infused with competing messages. The paper highlights how food and nutrition policy moved from solely a health concern to incorporate an economic dimension and links that shift with the quality of food available in Queensland schools.

Critical discourse analysis and political economy of communication : understanding the new corporate order

This article uses critical discourse analysis to analyse material shifts in the political economy of communications. It examines texts of major corporations to describe four key changes in political economy: (1) the separation of ownership from control; (2) the separation of business from industry; (3) the separation of accountability from responsibility; and (4) the subjugation of ‘going concerns’ by overriding concerns. The authors argue that this amounts to a political economic shift from traditional concepts of ‘capitalism’ to a new ‘corporatism’ in which the relationships between public and private, state and individual interests have become redefined and obscured through new discourse strategies. They conclude that the present financial and regulatory ‘crisis’ cannot be adequately resolved without a new analytic framework for examining the relationships between corporation, discourse and political economy.