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.

Pedagogy and paradox : teaching interpretation in a religious community

A qualitative, discourse analytic study of literate practices in a small religious community in a northern Australian city. The chapter documents how this community constructs religious reading and writing, affiliated ideologies and theologies, and how readers/hearers/learners are positions vis a vis the authority of sacred text.

Seeking inclusion : views from ‘vulnerable’ communities about reporting by the Australian news media

This conference paper reports on the findings of the 'Vulnerability and the News Media’ project about news reporting on communities that are commonly regarded as ‘vulnerable’ by virtue of their issues or circumstances. The project focuses on news reporting of Indigenous and ethnically diverse communities, as well as people affected by mental health issues, people with disabilities, and survivors of crime and traumatic events. Numerous educational initiatives have tried to improve the quality of media reports about these communities and their issues. Despite this, the project’s research with stakeholders from those communities has found that they continue to raise the same concerns that have been expressed about the news media since the 1970s. In focus group research, stakeholders from these communities expressed concern about their continuing under-representation or omission from the news media. They felt that voices, experiences, perspectives and issues from their communities rarely appeared, or if they did appear, it was in limited contexts – often in circumstances that portrayed them as vulnerable or disruptive. They also pointed to ongoing media misrepresentation, such as stereotyping, inappropriate framing, and over-reliance on ‘usual suspects’ to talk about their communities. A common theme that they voiced was their need for greater inclusiveness in the media. Participants wished that journalists would better represent the diversity of life experiences and perspectives within their communities. Stakeholders also wanted an increased in representation of their political frameworks, such as stories about the difficulties they encountered in dealing with social and bureaucratic systems, and their understandings of causes and potential solutions for issues affecting their communities.

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.

Parking, parties and pets : disputes - the dark side of community living

In the last decade community living, in master planned communities or strata titled complexes, has increased. As land becomes scarcer, the popularity of these schemes is predicted to grow. Offsetting this popularity is the peculiarities of community living, in particular the often unthought-of difficulties arising from living in very close proximity to your neighbour. Such difficulties affect both amenity of life and property value. This paper seeks to inform practitioners of the issues arising from community living. It does this by identifying the more common forms of disputes and considering recent tribunal and court decisions. The paper concludes by identifying the dispute warning signs to assist to practitioners with the valuation process.

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.

‘Hot chicks’, ‘better parties’ or academic stuff : perceptions of a regional university campus using Repertory Grid Analysis and Importance-performance Analysis

In the increasingly competitive Australian tertiary education market, a consumer orientation is essential. This is particularly so for small regional campuses competing with larger universities in the state capitals. Campus management need to carefully monitor both the perceptions of prospective students within the catchment area, and the (dis)satisfaction levels of current students. This study reports the results of an exploratory investigation into the perceptions held of a regional campus, using two techniques that have arguably been underutilised in the education marketing literature. Repertory Grid Analysis, a technique developed almost fifty years ago, was used to identify attributes deemed salient to year 12 high school students at the time they were applying for university places. Importance-performance analysis (IPA), developed three decades ago, was then used to identify attributes that were determinant for a new cohort of first year undergraduate students. The paper concludes that group applications of Repertory Grid offer education market researchers a useful means for identifying attributes used by high school students to differentiate universities, and that IPA is a useful technique for guiding promotional decision making. In this case, the two techniques provided a quick, economical and effective snapshot of market perceptions, which can be used as a foundation for the development of an ongoing market research programme.

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’.

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.

The emergence of emotions and religious sentiments during the September 11 disaster

Analyzing emotional states under duress or during heightened, life-and-death situations is extremely difficult, especially given the inability of laboratory experiments to replicate the environment and given the inherent biases of post event surveys. This is where natural experiments, such as the pager communications from September 11th can provide the kind of natural experiment emotion researchers have been seeking. We demonstrate that positive and pro-social communications are the first to emerge followed by the slower and lower negative communications. Religious sentiment is the last to emerge, as individual attempt to make sense of event. Additionally we provide a methodological discussion about the preparation and analysis of such natural experiments (the pager message content) and show the importance of using multiple methods to extract the broadest possible understanding.

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.

Australian copyright regimes and political economy of music

In this chapter I review the history of copyright in Australia through a singular and exemplary ruling of the Australian High Court made in 2012 and then relate that to the declining fortunes of Australian recorded music professionals. The case in point is Phonographic Performance Company [PPCA] of Australia Limited v Commonwealth of Australia [2012] HCA 8 (hereafter, HCA 8 2012). The case encapsulates the history of copyright law in Australia, with the judicial decision drawing substantive parts of its rationale from the Statute of Anne (8 Anne, c. 19, 1710), as well as copyright acts that regulated the Australian markets prior to 1968. More importantly the High Court decision serves to delineate some important political economic aspects of the recorded music professional in Australia and demonstrates Attali’s (1985) assertion that copyright is the mechanism through which composers are, by statute, literally excluded from capitalistic engagement as ‘productive labour’.