Redistributive taxation, public expenditure, and size of governent

We introduce a model of redistributive income taxation and public expenditure. This joint treatment permits analyzing the interdependencies between the two policies: one cannot be chosen independently of the other. Empirical evidence reveals that partisan confrontation essentially falls on expenditure policies rather than on income taxation. We examine the case in which the expenditure policy (or the size of government) is chosen by majority voting and income taxation is consistently adjusted. This adjustment consists of designing the income tax schedule that, given the expenditure policy, achieves consensus among the population. The model determines the consensus in- come tax schedule, the composition of public expenditure and the size of government. The main results are that inequality is negatively related to the size of government and to the pro-rich bias in public expenditure, and positively or negatively related to the marginal income tax, depending on substitutability between government supplied and market goods. These implications are validated using OECD data.

Economic and environmental effects of the CO2 taxation: an input-output analysis for Spain

CO2 emissions induced by human activities are the major cause of climate change; hence, strong environmental policy that limits the growing dependence on fossil fuel is indispensable. Tradable permits and environmental taxes are the usual tools used in CO2 reduction strategies. Such economic tools provide incentives to polluting industries to reduce their emissions through market signals. The aim of this work is to investigate the direct and indirect effects of an environmental tax on Spanish products and services. We apply an environmentally extended input-output (EIO) model to identify CO2 emission intensities of products and services and, accordingly, we estimate the tax proportional to these intensities. The short-term price effects are analyzed using an input-output price model. The effect of tax introduction on consumption prices and its influence on consumers’ welfare are determined. We also quantify the environmental impacts of such taxation in terms of the reduction in CO2 emissions. The results, based on the Spanish economy for the year 2007, show that sectors with relatively poor environmental profile are subjected to high environmental tax rates. And consequently, applying a CO2 tax on these sectors, increases production prices and induces a slight increase in consumer price index and a decrease in private welfare. The revenue from the tax could be used to counter balance the negative effects on social welfare and also to stimulate the increase of renewable energy shares in the most impacting sectors. Finally, our analysis highlights that the environmental and economic goals cannot be met at the same time with the environmental taxation and this shows the necessity of finding other (complementary or alternative) measures to ensure both the economic and ecological efficiencies. Keywords: CO2 emissions; environmental tax; input-output model, effects of environmental taxation.

Stabilization versus insurance: Welfare effects of procyclical taxation under incomplete markets

We construct and calibrate a general equilibrium business cycle model with unemployment and precautionary saving. We compute the cost of business cycles and locate the optimum in a set of simple cyclical fiscal policies. Our economy exhibits productivity shocks, giving firms an incentive to hire more when productivity is high. However, business cycles make workers' income riskier, both by increasing the unconditional probability of unusuallylong unemployment spells, and by making wages more variable, and therefore they decrease social welfare by around one-fourth or one-third of 1% of consumption. Optimal fiscal policy offsets the cycle, holding unemployment benefits constant but varying the tax rate procyclically to smooth hiring. By running a deficit of 4% to 5% of output in recessions, the government eliminates half the variation in the unemployment rate, most of the variation in workers'aggregate consumption, and most of the welfare cost of business cycles.

Effects of differential taxation on factor accumulation and growth

In this paper we try to analyze the role of fiscal policy in fostering a higher participation of the different production factors in the human capital production sector in the long-run. Introducing a tax on physical capital and differentiating both a tax on raw labor wage and a tax on skills or human capital we also attempt to present a way to influence inequality as measured by the skill premium, thus trying to relate the increase in human capital with the decrease in income inequality. We will do that in the context of a non-scale growth model.The model here is capable to alter the shares of private factors devoted to each of the two production sectors, final output and human capital, and affect inequality in a different way according to the different tax changes. The simulation results derived in the paper show how a human capital (skills) tax cut, which could be interpreted as a reduction in progressivity, ends up increasing both the shares of labor and physical capital devoted to the production of knowledge and decreasing inequality. Moreover, a raw labor wage tax decrease, which could also be interpreted as an increase in the progressivity of the system, increases the share of labor devoted to the production of final output and increases inequality. Finally, a physical capital tax decrease reduces the share of physical capital devoted to the production of knowledge and allows for a lower inequality value. Nevertheless, none of the various types of taxes ends up changing the share of human capital in the knowledge production, which will deserve our future attention

Effects of differential taxation on factor accumulation and growth

In this paper we try to analyze the role of fiscal policy in fostering a higher participation of the different production factors in the human capital production sector in the long-run. Introducing a tax on physical capital and differentiating both a tax on raw labor wage and a tax on skills or human capital we also attempt to present a way to influence inequality as measured by the skill premium, thus trying to relate the increase in human capital with the decrease in income inequality. We will do that in the context of a non-scale growth model.The model here is capable to alter the shares of private factors devoted to each of the two production sectors, final output and human capital, and affect inequality in a different way according to the different tax changes. The simulation results derived in the paper show how a human capital (skills) tax cut, which could be interpreted as a reduction in progressivity, ends up increasing both the shares of labor and physical capital devoted to the production of knowledge and decreasing inequality. Moreover, a raw labor wage tax decrease, which could also be interpreted as an increase in the progressivity of the system, increases the share of labor devoted to the production of final output and increases inequality. Finally, a physical capital tax decrease reduces the share of physical capital devoted to the production of knowledge and allows for a lower inequality value. Nevertheless, none of the various types of taxes ends up changing the share of human capital in the knowledge production, which will deserve our future attention

Modelling non-industrial private forest landowners' strategic decision making by using logistic regression and neural networks: case of predicting the choice of forest taxation basis

Summary

The Design of Forest Taxation: A Synthesis with New Directions

Summary

A Behavioral Account of the Labor Market: The Role of Fairness Concerns

In this paper, we argue that important labor market phenomena can be better understood if one takes (a) the inherent incompleteness and relational nature of most employment contracts and (b) the existence of reference-dependent fairness concerns among a substantial share of the population into account. Theory shows and experiments confirm that, even if fairness concerns were to exert only weak effects in one-shot interactions, repeated interactions greatly magnify the relevance of such concerns on economic outcomes. We also review evidence from laboratory and field experiments examining the role of wages and fairness on effort, derive predictions from our approach for entry-level wages and incumbent workers' wages, confront these predictions with the evidence, and show that reference-dependent fairness concerns may have important consequences for the effects of economic policies such as minimum wage laws.

Taxation of unhealthy consumption of food and drinks: An updated literature review

By means of a literature review this paper aims at shedding more light on the potentialities of unhealthy food/drink taxation in changing eating patterns and life styles and hence combating the obesity epidemic. One remarkable point that emerges when assessing the set of selected papers is the existence of a wide diversity of objectives, methodologies, settings and datasets, policies implemented and results achieved by all these studies, which undoubtedly adds complexity to any attempt to draw a general conclusion on fast food taxation. Most of the examined studies predict a rather modest fiscal impact on unhealthy food and drinks consumption and/or nutrition intake and consequently a poor result on weight loss and obesity, by the interplay of several factors among them the effects of cross-price elasticities.

Taxation of unhealthy consumption of food and drinks: An updated literature review

By means of a literature review this paper aims at shedding more light on the potentialities of unhealthy food/drink taxation in changing eating patterns and life styles and hence combating the obesity epidemic. One remarkable point that emerges when assessing the set of selected papers is the existence of a wide diversity of objectives, methodologies, settings and datasets, policies implemented and results achieved by all these studies, which undoubtedly adds complexity to any attempt to draw a general conclusion on fast food taxation. Most of the examined studies predict a rather modest fiscal impact on unhealthy food and drinks consumption and/or nutrition intake and consequently a poor result on weight loss and obesity, by the interplay of several factors among them the effects of cross-price elasticities.

The Taxation of Nonrenewable Natural Resources

We provide an analytical overview of the distortionary eff ects of some common forms of taxes faced by the nonrenewable resources sector of the economy. In the category of taxes meant speci fically to capture the resource rent, we look at a speci c severance tax, an 'ad valorem' severance tax, a profi t tax and a 'lump-sum' tax, with emphasis on their e ffects on the extraction decisions over time and on the initial reserves to be developed. In the category of taxes meant for all sectors of the economy, we look at the corporate income tax and its special provision for the resource sector in the form of a depletion allowance, with emphasis on the eff ects on the intra-industry resource extraction decisions and on the inter-industry allocation of investment.

Expanding Concept of Sale the Taxation Dilemma

School of Legal Studies, Cochin University of Science & Technology

The mutual agreement procedure and arbitration of double taxation disputes

It is in the interest of most states to eliminate double taxation (i.e. the payment of the same tax in two jurisdictions) of transnational commercial enterprises. Because such disputes involve, on the one hand, the state imposition of taxes, a right universally asserted by all states, and private entities on the other, taxation disputes between such parties are not, on their face, easily susceptible to arbitration. This article analyzes two dispute settlement procedures-the OECD First Model Tax Convention and a similar EU Convention-with the exclusive focus on disputes relating to the imposition of double taxation. It will look at the ways in which state roles may vary under these procedures from assisting in the negotiation process to taking a part similar to, but with important differences from, diplomatic protection on behalf of an affected enterprise. The article will examine the situations under which the settlement procedure is required and/or available, how the procedures are triggered, the obligations and parts played by the parties, the means by which the disputes are resolved (from negotiations to tribunals) and the limitations of the procedures. Are they “taxpayer friendly”? As a result the reader may draw comparisons between the two procedures. Finally, the article will look at the proposed OECD Arbitration Clause which is intended to be incorporated into Article 25 of the OECD Model Tax Convention as well as how these mechanisms relate and/or conflict with bilateral tax treaties and the GATS.