Optimal progressive taxation in a model with endogenous skill supply.

This paper examines whether efficiency considerations require that optimal labour income taxation is progressive or regressive in a model with skill heterogeneity, endogenous skill acquisition and a production sector with capital-skill complementarity. We find that wage inequality driven by the resource requirements of skill-creation implies progressive labour income taxation in the steady-state as well as along the transition path from the exogenous to optimal policy steady-state. We find that these results are explained by a lower labour supply elasticity for skilled versus unskilled labour which results from the introduction of the skill acquisition technology.

Progressive Taxes and Firm Births

Tax reform proposals in the spirit of the "flat tax" model typically aim to reduce three parameters: the average tax burden, the progressivity of the tax schedule, and the complexity of the tax code. We explore the implications of changes in these three parameters for entrepreneurial activity, measured by counts of firm births. The Swiss fiscal system offers sufficient intra-national variation in tax codes to allow us to estimate such effects with considerable precision. We find that high average taxes and complicated tax codes depress firm birth rates, while tax progressivity per se promotes firm births. The latter result supports the existence of an insurance effect from progressive corporate income taxes for risk averse entrepreneurs. However, implied elasticities with respect to the level and complexity of corporate taxes are an order of magnitude larger than elasticities with respect to the progressivity of tax schedules.

Fiscal Federalism and Tax Equalization: The potential for progressive local taxes

We construct an empirically informed computational model of fiscal federalism, testing whether horizontal or vertical equalization can solve the fiscal externality problem in an environment in which heterogeneous agents can move and vote. The model expands on the literature by considering the case of progressive local taxation. Although the consequences of progressive taxation under fiscal federalism are well understood, they have not been studied in a context with tax equalization, despite widespread implementation. The model also expands on the literature by comparing the standard median voter model with a realistic alternative voting mechanism. We find that fiscal federalism with progressive taxation naturally leads to segregation as well as inefficient and inequitable public goods provision while the alternative voting mechanism generates more efficient, though less equitable, public goods provision. Equalization policy, under both types of voting, is largely undermined by micro-actors' choices. For this reason, the model also does not find the anticipated effects of vertical equalization discouraging public goods spending among wealthy jurisdictions and horizontal encouraging it among poor jurisdictions. Finally, we identify two optimal scenarios, superior to both complete centralization and complete devolution. These scenarios are not only Pareto optimal, but also conform to a Rawlsian view of justice, offering the best possible outcome for the worst-off. Despite offering the best possible outcomes, both scenarios still entail significant economic segregation and inequitable public goods provision. Under the optimal scenarios agents shift the bulk of revenue collection to the federal government, with few jurisdictions maintaining a small local tax.

L'impôt progressif en France.

At head of title: Jules Dufay.

Rapport et projet de résolution présentés au nom de la Commission des contributions de l'an 5 : séance du 10 nivôse l'an 5 /

Goldsmiths'-Kress no. 17079.14-4, suppl.

Petrol consumption and redistributive effects of its taxation in Spain

The objective of this paper is to estimate a petrol consumption function for Spain and to evaluate the redistributive effects of petrol taxation. We use micro data from the Spanish Household Budget Survey of 1990/91 and model petrol consumption taking into account the effect that income changes may have on car ownership levels, as well as the differences that exist between expenditure and consumption. Our results show the importance that household structure, place of residence and income have on petrol consumption. We are able to compute income elasticities of petrol expenditure, both conditional and unconditional on the level of car ownership. Non-conditional elasticities, while always very close to unit values, are lower for higher income households and for those living in rural areas or small cities. When car ownership levels are taken into account, conditional elasticities are obtained that are around one half the value of the non- conditional ones, being fairly stable across income categories and city sizes. As regards the redistributive effects of petrol taxation, we observe that for the lowest income deciles the share of petrol expenditure increases with income, and thus the tax can be regarded as progressive. However, after a certain income level the tax proves to be regressive.

Optimal taxation and the skill premium

The stylized facts suggest a negative relationship between tax progressivity and the skill premium from the early 1960s until the early 1990s, and a positive one thereafter. They also generally imply rising tax progressivity, except for the 1980s. In this paper, we ask whether optimal tax policy is consistent with these observations, taking into account the demographic and technological factors that have also affected the skill premium. To this end, we construct a dynamic general equilibrium model in which the skill premium and the progressivity of the tax system are endogenously determined, with the latter being optimally chosen by a benevolent government. We find that optimal policy delivers both a progressive tax system and model predictions which are generally consistent, except for the 1980s, with the stylized facts relating to the skill premium and progressivity. To capture the patterns in the data over the 1980s requires that we adopt a government policy which is biased towards the interests of skilled agents. Thus, in addition to demographic and technological factors, changes in the preferences of policy-makers appear to be a potentially important factor in determining the evolution of the observed skill premium.

On the optimality of progressive income redistribution

We compute the optimal non-linear tax policy for a dynastic economy with uninsurable risk, where generations are linked by dynastic wealth accumulation and correlated incomes. Unlike earlier studies, we find that the optimal long-run tax policy is moderately regressive. Regressive taxes lead to higher output and consumption, at the expense of larger after-tax income inequality. Nevertheless, equilibrium effects and the availability of self-insurance via bequests mitigate the impact of regressive taxes on consumption inequality, resulting in improved average welfare overall. We also consider the optimal once-and-for-all change in the tax system, taking into account the transition dynamics. Starting at the U.S. status quo, the optimal tax reform is slightly more progressive than the current system.

Dysregulated hematopoiesis and a progressive neurological disorder induced by expression of an activated form of the human common beta chain in transgenic mice

Previously we described activating mutations of h beta(c), the common signaling subunit of the receptors for the hematopoietic and inflammatory cytokines, GM-CSF, IL-3, and IL-5. The activated mutant, h beta(c)FI Delta, is able to confer growth factor-independent proliferation on the murine myeloid cell line FDC-P1, and on primary committed myeloid progenitors. We have used this activating mutation to study the effects of chronic cytokine receptor stimulation. Transgenic mice were produced carrying the h beta(c)FI Delta cDNA linked to the constitutive promoter derived from the phosphoglycerate kinase gene, PGK-1. Transgene expression was demonstrated in several tissues and functional activity of the mutant receptor was confirmed in hematopoietic tissues by the presence of granulocyte macrophage and macrophage colony-forming cells (CFU-GM and CFU-M) in the absence of added cytokines. All transgenic mice display a myeloproliferative disorder characterized by splenomegaly, erythrocytosis, and granulocytic and megakaryocytic hyperplasia. This disorder resembles the human disease polycythemia vera, suggesting that activating mutations in h beta(c) may play a role in the pathogenesis of this myeloproliferative disorder. In addition, these transgenic mice develop a sporadic, progressive neurological disease and display bilateral, symmetrical foci of necrosis in the white matter of brain stem associated with an accumulation of macrophages. Thus, chronic h beta(c) activation has the potential to contribute to pathological events in the central nervous system.

Progressive dysgraphia in a case of posterior cortical atrophy

Dysgraphia (agraphia) is a common feature of posterior cortical atrophy (PCA). However, detailed analyses of these spelling and writing impairments are infrequently conducted. LM is a 59-year-old woman with dysgraphia associated with PCA. She presented with a two-year history of decline in her writing and dressmaking skills. A 3D T-1-weighted MRI scan confirmed selective bi-parietal atrophy, with relative sparing of the hippocampi and other cortical regions. Analyses of LM's preserved and impaired spelling abilities indicated mild physical letter distortions and a significant spelling deficit characterised by letter substitutions, insertions, omissions, and transpositions that was systematically sensitive to word length while insensitive to real word versus nonword category, word frequency, regularity, imagery, grammatical class and ambiguity. Our findings suggest a primary graphemic buffer disorder underlies LM's spelling errors, possibly originating from disruption to the operation of a fronto-parietal network implicated in verbal working memory.

Interstitial expression of angiotensin II and AT1 receptor are increased in patients with progressive glomerulopathies

In animal models, interstitial angiotensin II (ang II) and AT1 receptor (AT1R) are key mediators of renal inflammation and fibrosis in progressive chronic nephropathies. We hypothesized that these molecules were overexpressed in patients with progressive glomerulopathies. In this observational retrospective study, we described the expression of ang II and AT1R by immunohistochemistry in kidney biopsies of 7 patients with minimal change disease (MCD) and in 25 patients with progressive glomerulopathies (PGPs). Proteinuria, serum albumin, and serum creatinine were not statistically different between MCD and PGP patients. Total expression of ang II and AT1R was not statistically different between MCD (108.7 +/- 11.5 and 73.2 +/- 13.6 cells/mm(2), respectively) and PGN patients (100.7 +/- 9.0 and 157.7 +/- 13.8 cells/mm(2), respectively; p>0.05). Yet, interstitial expression of ang II and AT1R (91.6 +/- 16.0 and 45.6 +/- 5.4 cells/mm(2), respectively) was higher in patients with PGN than in those with MCD (22.0 +/- 4.1 and 17.9 +/- 2.9 cells/mm(2), respectively, p<0.05), as was the proportion of interstitial fibrosis (11.0 +/- 0.7% versus 6.1 +/- 1.2%, p<005). In patients with MCD, ang II and AT1R expressions predominate in the tubular compartment (52% and 36% of the positive cells, respectively). In those with PGP, the interstitial expression of ang II and AT1R predominates (58% and 45%, respectively). In conclusion, interstitial expression of ang II and AT1R is increased in patients with progressive glomerulopathies. The relationship of these results and interstitial fibrosis and disease progression in humans warrants further investigations.

Cardiovascular, metabolic and hormonal responses to the progressive exercise performed to exhaustion in patients with type 2 diabetes treated with metformin or glyburide

Objectives: To evaluate the effects of Metformin and Glyburide on cardiovascular, metabolic and hormonal parameters during progressive exercise performed to exhaustion in the post-prandial state in women with type 2 diabetes (T2DM). Design and Methods: Ten T2DM patients treated with Metformin (M group), 10 with Glyburide (G group) and 10 age-paired healthy subjects exercised on a bicycle ergometer up to exercise peak. Cardiovascular and blood metabolic and hormonal parameters were measured at times -60 min, 0 min, exercise end, and at 10 and 20 minutes of recovery phase. Thirty minutes before the exercise, a standard breakfast was provided to all participants. The diabetic patients took Metformin or Glyburide before or with meal. Results: Peak oxygen uptake (VO2) was lower in patients with diabetes. Plasma glucose levels remained unchanged, but were higher in both diabetic groups. Patients with diabetes also presented lower insulin levels after meals and higher glucagon levels at exercise peak than C group. Serum cortisol levels were higher in G than M group at exercise end and recovery phase. Lactate levels were higher in M than G group at fasting and in C group at exercise peak. Nor epinephrine, GH and FFA responses were similar in all 3 groups. Conclusion: Progressive exercise performed to exhaustion, in the post-prandial state did not worsen glucose control during and after exercise. The administration of the usual dose of Glyburide or Metformin to T2DM patients did not influence the cardiovascular, metabolic and hormonal response to exercise.

A novel WT1 heterozygous nonsense mutation (p.K248X) causing a mild and slightly progressive nephropathy in a 46,XY patient with Denys-Drash syndrome

WT1 mutations have been described in a variety of syndromes, including Denys-Drash syndrome (DDS), which is characterized by predisposition to Wilms` tumor, genital abnormalities and development of early nephropathy. The most frequent WT1 defects in DDS are missense mutations located in exons 8-9. Our aim is to report a novel WT1 mutation in a 46,XY patient with a DDS variant, who presented a mild nephropathy with a late onset diagnosed during adolescence. He had ambiguous genitalia at birth. At 4 months of age he underwent nephrectomy (Wilms` tumor) followed by chemotherapy. Ambiguous genitalia were corrected and bilateral gonadectomy was performed. Sequencing of WT1 identified a novel heterozygous mutation (c.742A > T) in exon 4 that generates a premature stop codon (p.K248X). Interestingly, this patient has an unusual DDS nephropathy progression, which reinforces that patients carrying WT1 mutations should have the renal function carefully monitored due to the possibility of late-onset nephropathy.