| 1. |
- Aronsson, Thomas, 1963-, et al.
(författare)
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A Note on Public Goods in a Decentralized Fiscal Union : Implications of a Participation Constraint
- 2014
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Ingår i: Journal of Urban Economics. - : Elsevier. - 0094-1190 .- 1095-9068. ; 84, s. 1-8
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Tidskriftsartikel (refereegranskat)abstract
- This paper re-examines the question of whether federal ex-post redistribution in terms of public funds leads to under-provision of public goods when member states may leave the economic federation. We show that federal ex-post redistribution under a binding participation constraint does not necessarily mean under-provision of local and federal public goods.
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| 2. |
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| 3. |
- Aronsson, Thomas, 1963-, et al.
(författare)
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Optimal Redistributive Income Taxation and Efficiency Wages
- 2017
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper integrates efficiency wage setting in the theory of optimal redistributive income taxation. In doing so, we use a model with two skill-types, where efficiency wage setting characterizes the labor market faced by the low-skilled, whereas the high-skilled face a conventional, competitive labor market. There are two types of jobs in this economy; a low-demanding job which can be carried out by everybody, and a high-demanding job which can only be carried out by the high-skilled, meaning that a potential mimicker may either adopt a conventional income-replication strategy or a job-replication strategy. In this framework, we show that the marginal income tax implemented for the high-skilled is negative under plausible assumptions. The marginal income tax facing the low-skilled can be either positive or negative in general, even if employment-related motives for policy intervention typically contribute to an increase in this marginal tax. An increase in the unemployment benefit contributes to relax the binding self-selection constraint (irrespective of the strategy adopted by a potential mimicker), which makes this instrument particularly useful from the perspective of redistribution.
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| 4. |
- Aronsson, Thomas, 1963-, et al.
(författare)
-
Optimal Redistributive Income Taxation and Efficiency Wages
- 2021
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Ingår i: Scandinavian Journal of Economics. - : John Wiley & Sons. - 0347-0520 .- 1467-9442. ; 3:1, s. 3-32
-
Tidskriftsartikel (refereegranskat)abstract
- In this paper, we integrate efficiency wage setting with the theory of optimal redistributive income taxation. In doing so, we use a model with two skill types, where efficiency wage setting characterizes the labor market faced by the low‐skilled, whereas the high‐skilled face a conventional, competitive labor market. We show that the marginal income tax implemented for the high‐skilled is negative under plausible assumptions. The marginal income tax facing the low‐skilled can be either positive or negative, in general. An increase in unemployment benefits contributes to a relaxation of the binding self‐selection constraint, which makes this instrument particularly useful from the perspective of redistribution.
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| 5. |
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| 6. |
- Aronsson, Tomas, et al.
(författare)
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Where Should the Elderly Live and Who Should Pay for their Care? A Study in Demographics and Geographical Economics
- 2007
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- There is a rich literature analyzing the problems that will arise as the share of elderly and retired in the population increases in the near future. However, the locational decisions among the elderly as well as their implications in terms of taxes/transfers and of allocation of responsibilities for elderly care between the federal and local levels have not received much attention. In this paper we aim at investigating these issues. For this purpose we explore a model where there is a big city and a set of small villages, and where congestion effects and agglomeration forces are at work at the level of the big city. We also assume that the population is divided between two groups of agents, workers and retired, which differ with respect to the degree of mobility. In the first part of the paper we study and characterize the inefficiencies that arise because of individuals’ free location choice in the context of a unitary government. In the second part of the paper we consider a fiscal federalism structure and we investigate the suitable instruments that are needed in order to decentralize the optimal allocation obtained under full centralization.
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| 7. |
- Aronsson, Thomas, 1963-, et al.
(författare)
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Where Should the Eldery Live and Who Should Pay for Their Care?
- 2010
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Ingår i: Scandinavian Journal of Economics. - : Wiley. - 0347-0520 .- 1467-9442. ; 112:2, s. 289-314
-
Tidskriftsartikel (refereegranskat)abstract
- We consider a model with a population consisting of earners and retired persons; elderly care is publicly provided. There is one big city, where congestion effects and agglomeration forces are at work, and a number of small villages. We show how the externalities related to population mobility lead to an inefficient spatial distribution of earners and retirees, and we characterize the second-best solution. Decentralization of this solution in a fiscal federalism structure requires the use of taxes and subsidies proportional to the number of earners and retired persons living in the city and the villages.
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| 8. |
- Bastani, Spencer, et al.
(författare)
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Anti-discrimination Legislation and the Efficiency-Enhancing Role of Mandatory Parental Leave
- 2016
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- We study a setting where anti-discrimination legislation gives rise to adverseselection in the labor market. Firms rely on nonlinear compensation contracts toscreen workers who differ in their family/career orientation. This results in a labormarket equilibrium where career-oriented workers are offered an inefficientlylow duration of parental leave. In addition, family-oriented workers are offeredlower wages as compared to their equally skilled career-oriented counterparts. Wedemonstrate the usefulness of mandatory parental leave rules in mitigating thedistortion in the labor market and derive conditions under which a Pareto improvementis possible. We also characterize the optimal parental leave policy andhighlight the possibility for parental leave legislation to eliminate the wage penaltyof family-oriented workers by supporting pooling employment contracts.
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| 9. |
- Bastani, Spencer, Docent, 1982-, et al.
(författare)
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Child care subsidies, quality and optimal income taxation
- 2020
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Ingår i: American Economic Journal. - : American Economic Association. - 1945-7731 .- 1945-774X. ; 12:4, s. 1-37
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Tidskriftsartikel (refereegranskat)abstract
- We study child care subsidies in a Mirrleesian optimal tax framework where parents choose both the quantity and quality of child care. Child care services not only enable parents to work, but also contribute to children’s human capital. We examine the conditions under which child care expenditures should be encouraged or discouraged by the tax system under different assumptions regarding the available policy instruments. Using a quantitative model calibrated to the US economy, we illustrate the possibility that child care expenditures should be taxed rather than subsidized, and discuss the merits of public provision schemes for child care.
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| 10. |
- Bastani, Spencer, et al.
(författare)
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Child Care Subsidies, Quality, and Optimal Income Taxation
- 2017
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- In this paper we examine the desirability of subsidizing child care expenditures in a model where parents can choose both the quantity and the quality of child care services they purchase in the market. Our vehicle of analysis is a Mirrleesian optimal tax framework where child care services not only enable parents to work, but also contribute to children's formation of human capital. In addition, there are externalities related to the parents' choice of child care arrangements for their offspring. Using a quantitative simulation model calibrated to the US economy, we evaluate the relative merits of some the most common forms of child care subsidies (tax deductions, tax credits, and opting-out public provision schemes) in terms of their effectiveness in alleviating the distortions associated with income taxation and increasing the quality of child care chosen by parents.
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| 11. |
- Bastani, Spencer, 1982-
(författare)
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Essays on the Economics of Income Taxation
- 2012
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of five self-contained essays.Essay 1. (with Sören Blomquist and Luca Micheletto) Using a calibrated overlapping-generations model we quantify the welfare gains of an age-dependent labor income tax. Agents face uncertainty regarding future abilities and can transfer consumption across periods through savings. The welfare gain of switching from an age-independent to an age-dependent nonlinear tax varies between 2.4% and 4% of GDP. Part of the welfare gain is due to capital accumulation effects and part descends from relaxing incentive-compatibility constraints. The welfare gain is of about the same magnitude as the welfare gain that can be achieved by moving from a linear- to a nonlinear labor income tax. Finally, the welfare loss from tax-exempting interest income is negligible under an optimal age-dependent labor income tax.Essay 2. (with Sören Blomquist and Luca Micheletto)Previous literature has shown that public provision of private goods can be a welfare-enhancing device in second-best settings where governments pursue redistributive goals. However, three issues have so far been neglected. First, the case for supplementing an optimal nonlinear income tax with public provision of private goods has been made in models where agents differ only in terms of market ability. Second, the magnitude of the welfare gains achievable through public provision schemes has not been assessed. Third, the similarities/differences between public provision schemes and tagging schemes have not been thoroughly analyzed. Our purpose in this paper is therefore threefold: first, to extend previous contributions by incorporating in the theoretical analysis both heterogeneity in market ability and in the need for the publicly provided good; second, to perform numerical simulations to quantify the size of the potential welfare gains achievable by introducing a public provision scheme, and to characterize the conditions under which these welfare gains are sizeable; finally, to compare the welfare gains from public provision with the welfare gains from tagging. Essay 3. (with Sören Blomquist and Luca Micheletto)Subsidized child care is a common phenomenon in both Europe and the United States. In this paper we study the efficiency of some of the most common types of child care subsidies. These are a (refundable) tax credit, tax deductibility and public provision. We evaluate the relative efficiency of these instruments using a quantitative simulation model calibrated to resemble the US economy. In our framework there is a special tax treatment for families with children of child care age, which is based on an assumption that agrees with facts pertaining to actual circumstances in the United States, as well as many other countries. We keep the net tax revenue for this group of tax payers constant, hence the subsidies to child care are paid for by the group itself. It is a commonly held view that in a 'good society' all children should have equal opportunities in life. Many proponents of subsidized childcare argue that one way to move in this direction is to allow all children access to good quality child care. We capture this ideological perspective by using a paternalistic social welfare function which places special emphasis on the quality of child care purchased by households. Using a standard social welfare function we find tax deductibility to be the most efficient instrument to subsidize child care and public provision the least efficient instrument. These results are completely reversed when using the paternalistic welfare function and when society has the goal of providing all children with access to good quality child care. Public provision then becomes the best way to subsidize child care. An important aspect of public provision is that it is an efficient instrument in raising the quality of child care. Essay 4. In a recent paper Alesina et al. (2011) construct a model in which different labor supply elasticities for men and women emerge endogenously from intra-household bargaining. In this paper I explore the optimal tax implications of their model in an economy with both singles and couples and inequality across as well as within households. In the model, the welfare of married women can be improved by lowering taxes for single women. However, this benefit must be weighed against the welfare cost of taxing single men and women at different rates. Moreover, if single men earn more than single women, the welfare of married women can alternatively be improved by a gender-neutral tax scheme which taxes singles at a higher rate. Because the government is concerned not only with equalizing utilities within families, but also with the redistribution between high income and low income households, gender-based adjustments in the income tax must be weighed against the welfare consequences of changing the progressivity of the tax system. I find that larger lump-sum transfers to women is always optimal. Interestingly, marginal tax rates, on the other hand, should be lower for women only if the exogenous bargaining power of men is moderate. The welfare gains of gender based taxation are sizable and the welfare gains of having tax instruments which depend on household composition are even larger.Essay 5. (with Håkan Selin) Recent microeconometric studies of taxpayers' responsiveness to taxation have shown that intensive margin labor supply and earnings elasticities typically are modest and sometimes equal to zero. However,a common view is that long-run responses might still be large since micro-estimates are downward biased owing to optimization frictions. In this paper we estimate the taxable income elasticity at a very large kink point of the Swedish tax schedule using the bunching method. During the period of study the change in the log net-of-tax rate reached a maximum value of 45.6%. Interestingly, we obtain a precise elasticity estimate of zero for wage earners at this large kink. The size of the kink allows us to derive tighter bounds on the long-run elasticity than previous studies. If wage earners on average tolerate 1% of their disposable income in optimization costs, the upper bound on the long-run taxable income elasticity is 0.39. We also evaluate the performance of the bunching estimator by performing Monte Carlo simulations.
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| 12. |
- Bastani, Spencer, 1982-, et al.
(författare)
-
Gender wage gap and the welfare-enhancing role of parental leave rules
- 2017
-
Ingår i: ifo DICE Report. - Munich : ifo Institute. - 2511-7815 .- 2511-7823. ; 15:2, s. 3-7
-
Tidskriftsartikel (övrigt vetenskapligt/konstnärligt)abstract
- A large body of empirical evidence documents the gender variation in labour market outcomes. A major factor that contributes to persistent gender gaps in labour market performance is women’s traditional role in the household. Child-related absences from work imply that women accumulate less job experience, are more prone to career discontinuities and, hence, suffer a motherhood penalty. We highlight how the fundamental gender-driven career/family conflict faced by workers in the labour market may create a normative justification for parental leave rules as a means to enhance efficiency and alleviate the gender pay gap.
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| 13. |
- Bastani, Spencer, 1982-, et al.
(författare)
-
Nonlinear and piecewise linear income taxation, and the subsidization of work-related goods
- 2019
-
Ingår i: International Tax and Public Finance. - : SPRINGER. - 0927-5940 .- 1573-6970. ; 26:4, s. 806-834
-
Tidskriftsartikel (refereegranskat)abstract
- We investigate how the social welfare gain of subsidizing work-related goods depends on whether the underlying income tax system is linear, piecewise linear or fully nonlinear, focusing on child care services as a paradigmatic example of goods/services that are complements with labor supply. Our quantitative analysis employs an empirically relevant labor supply model and shows that the welfare gain of an optimally chosen subsidy is negligible when the optimal income tax is restricted to be linear but about the same as under fully nonlinear taxation when the optimal income tax is restricted to be piecewise linear. Our findings enhance the policy relevance of the optimal tax argument in favor of providing subsidies to work-related goods and also shed light on the relative welfare gains of employing piecewise linear rather than fully nonlinear income taxes.
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| 14. |
- Bastani, Spencer, 1982-, et al.
(författare)
-
Nonlinear taxation of income and education in the presence of income-misreporting
- 2023
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Ingår i: Journal of Public Economic Theory. - : John Wiley & Sons. - 1097-3923 .- 1467-9779. ; 25:4, s. 679-726
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Tidskriftsartikel (refereegranskat)abstract
- We study the joint design of nonlinear income and education taxes when the government pursues redistributive objectives. A key feature of our setup is that the ability type of an agent can affect both the costs and benefits of acquiring education. Market remuneration of agents depends on both their innate ability type and their educational choices. Our focus is on the properties of constrained efficient allocations when educational choices are publicly observable at the individual level, but earned income is subject to misreporting. We find that income-misreporting (IM) affects the optimal distortions on income and education and shed light on the reasons for it and mechanisms through which it is done. We show how and why IM strengthens the case for downward distorting the educational choices of low-ability agents. Finally, we find that IM provides another mechanism that makes commodity taxation useful.
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| 15. |
- Bastani, Spencer, et al.
(författare)
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Optimal commodity taxation with varying quality of goods
- 2016
-
Ingår i: Research in Economics. - : Elsevier. - 1090-9443 .- 1090-9451. ; 70:1, s. 89-100
-
Tidskriftsartikel (refereegranskat)abstract
- A standard result in the optimal taxation literature is that when agents differ in market ability and the government aims at redistributing from high- to low-skilled agents by means of an optimal nonlinear labor income tax and a set of commodity taxes, an optimally designed commodity tax structure should encourage (discourage) the consumption of goods/services that are complement with labor (leisure). In this paper we highlight that when agents can choose both the quality and the quantity of a given good/service, this standard commodity tax result needs to be qualified. First, we show that it becomes relevant to distinguish between specific and ad valorem taxes/subsidies. Second, whether the standard result holds or not depends on how the concept of labor (leisure) complement is defined, namely, whether it is defined in terms of number of units or in terms of expenditure. We also show that levying specific and ad valorem taxes at opposite signs on a given good can be a feature of the second-best optimum.
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| 16. |
- Bastani, Spencer, et al.
(författare)
-
Optimal Wage Redistribution in the Presence of Adverse Selection in the Labor Market
- 2014
-
Rapport (övrigt vetenskapligt/konstnärligt)abstract
- In this paper we allude to a novel role played by the non-linear income tax system in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. We show that an appropriate choice of the tax schedule enables the government to affect the wage distribution by controlling the transmission of information in the labor market. This represents an additional channel through which the government can foster the pursuit of its redistributive goals.
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| 17. |
- Bastani, Spencer, et al.
(författare)
-
Optimal wage redistribution in the presence of adverse selection in the labor market
- 2015
-
Ingår i: Journal of Public Economics. - : Elsevier BV. - 0047-2727 .- 1879-2316. ; 131, s. 41-57
-
Tidskriftsartikel (refereegranskat)abstract
- In this paper we highlight a novel role played by the non-linear income tax in the presence of adverse selection in the labor market due to asymmetric information between workers and firms. Relying on the Rothschild and Stiglitz equilibrium concept, we show that an appropriate choice of the tax schedule enables the government to affect the wage distribution by controlling the transmission of information in the labor market. This represents an additional channel through which the government can foster the pursuit of its redistributive goals.
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| 18. |
- Bastani, Spencer, Docent, 1982-, et al.
(författare)
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Pareto efficient income taxation without single-crossing
- 2020
-
Ingår i: Social Choice and Welfare. - : Springer. - 0176-1714 .- 1432-217X. ; 55:3, s. 547-594
-
Tidskriftsartikel (refereegranskat)abstract
- We provide a full characterization of a two-type optimal nonlinear income tax model where the single-crossing condition is violated due to an assumption that agents differ both in terms of market abilities and in terms of their needs for a work-related good. We set up a Pareto-efficient tax problem and analyze the entire second-best Pareto-frontier, highlighting several non-standard results, such as the possibility of income re-ranking relative to the laissez-faire and gaps in the Pareto-frontier.
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| 19. |
- Bastani, Spencer, Docent, 1982-, et al.
(författare)
-
Public pensions in a multi-period Mirrleesian income tax model
- 2016
-
Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Using an OLG model with skill uncertainty and private savings, we investigate whether an optimally designed set of public pension transfers can usefully supplement a nonlinear labor income tax as a welfare-enhancing policy instrument. We consider a Mirrleesian setting where agents' skills are private information and highlight that, even though pensions, by crowding out private savings, adversely affect the achievement of the golden-rule, they can be used as a mimicking-deterring device that makes it easier for the government to achieve the desired redistributive goals.
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| 20. |
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| 21. |
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| 22. |
- Bastani, Spencer, et al.
(författare)
-
Public Provision of Private Goods, Tagging and Optimal Income Taxation with Heterogeneity in Needs
- 2010
-
Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Previous literature has shown that public provision of private goods can be a welfareenhancing device in second-best settings where governments pursue redistributive goals. However, three issues have so far been neglected. First, the case for supplementing an optimal nonlinear income tax with public provision of private goods has been made in models where agents dier only in terms of market ability. Second, the magnitude of the welfare gains achievable through public provision schemes has not been assessed. Third, the similarities/dierences between public provision schemes and tagging schemes have not been thoroughly analyzed. Our purpose in this paper is therefore threefold: rst, to extend previous contributions by incorporating in the theoretical analysis both heterogeneity in market ability and in the need for the publicly provided good; second, to perform numerical simulations to quantify the size of the potential welfare gains achievableby introducing a public provision scheme, and to characterize the conditions under which these welfare gains are sizeable; nally, to compare the welfare gains from public provision with the welfare gains from tagging.
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| 23. |
- Bastani, Spencer, Docent, 1982-, et al.
(författare)
-
The Welfare-Enhancing Role of Parental Leave Mandates
- 2019
-
Ingår i: Journal of Law, Economics & Organization. - : Oxford University Press. - 8756-6222 .- 1465-7341. ; 35:1, s. 77-126
-
Tidskriftsartikel (refereegranskat)abstract
- A major factor that contributes to persistent gender variation in labor market outcomes is womens traditional role in the household. Child-related absences from work imply that women accumulate less job experience, are more prone to career discontinuities and, hence, suffer a motherhood penalty. We highlight how the gender-driven career/family segmentation of the labor market may create a normative justification for parental leave rules as a means to enhance efficiency in the labor market and alleviate the gender wage gap. (JEL D82, H21, J31, J83).
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| 24. |
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| 25. |
- Bastani, Spencer, et al.
(författare)
-
The Welfare Gains of Age Related Optimal Income Taxation
- 2010
-
Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Using a calibrated overlapping generations model we quantify the welfare gains of an age dependent income tax. Agents face uncertainty regarding future abilities and can by saving transfer consumption across periods. The welfare gain of switching from an age-independent to an age-dependent nonlinear tax amounts in our benchmark model to around three percent of GDP. The gains are particularly high when there are restrictions on debt policy. The gains of using a nonlinear- as opposed to a linear tax are even larger. Surprisingly, it is of secondary importance to optimally choose the tax on interest income.
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| 26. |
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| 27. |
- Bastani, Spencer, et al.
(författare)
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Welfare Gains Of Age-Related Optimal Income Taxation
- 2013
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Ingår i: International Economic Review. - : Wiley. - 0020-6598 .- 1468-2354. ; 54:4, s. 1219-1249
-
Tidskriftsartikel (refereegranskat)abstract
- Using an overlapping generations model with skill uncertainty and private savings, we quantify the gains of age-dependent labor income taxation. The total steady-state welfare gain of switching from age-independent to age-dependent nonlinear taxation varies between 2.4% and 4% of GDP. Part of the gain descends from relaxing incentive-compatibility constraints and part is due to capital-accumulation effects. The welfare gain is of about the same magnitude as that which can be achieved by moving from linear to nonlinear income taxation. Finally, the welfare loss from tax-exempting interest income is negligible under an optimal age-dependent labor income tax.
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| 28. |
- Blomquist, Sören, et al.
(författare)
-
Age related optimal income taxation
- 2003
-
Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The focus of the present paper is on the intragenerational effects of nonlinear income taxation in a multiperiod framework. We investigate whether it is possible to achieve redistribution at smaller efficiency costs by enlarging the message space adopted in standard tax system (which only includes reported income) to consider also the age of taxpayers. Since it would be awkward to analyze an age related tax without taking into account the time-dimension, we use an intertemporal extension of the Stiglitz-Stern (1982, 1982) discrete adaptation of the Mirrlees (1971) optimal income taxation model. In the simplest version of the model we neglect the possibility of savings. This case can be interpreted as a situation with extreme liquidity constraints. It is shown that switching to an age related tax system opens the way for a Pareto improving tax reform entailing a cut in marginal tax rates for young agents. In a second version of the model we retain the possibility of savings and, assuming that the policy maker can tax interest incomes on a linear scale, we also analyze the optimal values of the interest income tax rate for the age dependent and the age independent tax systems.
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| 29. |
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| 30. |
- Blomquist,, Sören, et al.
(författare)
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Age-related optimal income taxation
- 2008
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Ingår i: Scandinavian Journal of Economics. - : Wiley. - 0347-0520 .- 1467-9442. ; 110:1, s. 45-71
-
Tidskriftsartikel (refereegranskat)abstract
- In most countries, average income varies with age. In this paper we investigate if and how it is possible to enhance the redistributive mechanism by relating tax payments to age. Using an OLG model where some individuals are low skilled all their life while others are low skilled when young but high skilled when old, we first show how an age dependent optimal income tax can Pareto improve upon an age independent income tax. We then characterize the optimal age dependent income tax. A tax on interest income is part of the optimal tax structure..
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| 31. |
- Blomquist, Sören, et al.
(författare)
-
Nonlinear income taxation and matching grants in a federation with decentralized in-kind transfers
- 2009
-
Ingår i: International Economic Review. - : Wiley. - 0020-6598 .- 1468-2354. ; 50:2, s. 543-575
-
Tidskriftsartikel (refereegranskat)abstract
- We extend to a fiscal federalism setting the literature on redistributive in-kind transfers in the presence of nonlinear income taxation. Local governments have a cost advantage, motivating decentralization of the in-kind transfer. The cost structure varies across regions, and the central government cannot observe which region is which. We show that decentralized in-kind transfers can, in this setting, be an even more important instrument for relaxing self-selection constraints, thus, helping redistribution, than in single-government models. We characterize the optimal marginal tax rates and matching grants. The grants have a very different structure than the one derived in earlier studies.
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| 32. |
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| 33. |
- Blomquist, Sören, et al.
(författare)
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Optimal Redistributive Taxation when Government’s and Agents’ Preferences Differ
- 2005
-
Rapport (populärvet., debatt m.m.)abstract
- Paternalism, merit goods and specific egalitarianism are concepts we sometimes meet in the literature. The thing in common is that the policy maker does not fully respect the consumer sovereignty principle and design policies according to some other criterion than individuals’ preferences. Using the self-selection approach to tax problems devel- oped by Stiglitz (1982) and Stern (1982), the paper provides a char- acterization of the properties of an optimal redistributive mixed tax scheme in the general case when the government evaluates individuals’ well-being using a different utility function than the one maximized by private agents.
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| 34. |
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| 35. |
- Blomquist, Sören, et al.
(författare)
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Public Provision of Private Goods and Nondistortionary Marginal Tax Rates
- 2010
-
Ingår i: American Economic Journal: Economic Policy. - : American Economic Association. - 1945-7731 .- 1945-774X. ; 2:2, s. 1-27
-
Tidskriftsartikel (refereegranskat)abstract
- Using an optimal taxation model combined with a previously neglected scheme of public provision of private goods, we show that there is an efficiency gain if public provision of selected goods replaces market purchases and that efficiency requires marginal income tax rates to be higher than if the goods were purchased in the market. Part of the marginal tax serves the same role as a market price and conveys information about a real social cost of working more hours. It might be that economies with higher marginal tax rates have less severe distortions than economies with lower marginal tax rates. (JEL H21, H42, I38).
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| 36. |
- Blomquist,, Sören, et al.
(författare)
-
Public Provision of Private Goods and Nondistortionary Marginal Tax Rates : Some Further Results
- 2009
-
Rapport (övrigt vetenskapligt/konstnärligt)abstract
- The incidence and efficiency losses of taxes have usually been analyzed in isolation from public expenditures. This negligence of the expenditure side may imply a serious misperception of the effects of marginal tax rates. The reason is that part of the marginal tax may in fact be a payment for publicly provided goods and reflects a cost that the consumers should bear in order to face the proper incentives. Hence, part of the marginal tax may serve the same role as a market price in the sense that it conveys information about a real social cost of working more hours. We develop this idea formally by studying an optimal income tax model in combination with a type of public provision scheme not analyzed before; the provision level is individualized and positively associated with the individual’s labor supply. As examples we discuss child care, elderly care, primary education and health care. We show that there is a potential gain in efficiency where public provision of such services replaces market purchases. We also show that it is necessary for efficiency that, other things equal, marginal income tax rates are higher than in economies where the services are purchased in the market. This because the optimal tax should be designed so as to face the taxpayers with the real cost of providing the services. Hence, it might very well be that economies with higher marginal tax rates have less severe distortions than economies with lower marginal tax rates.
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| 37. |
- Blomquist, Sören, et al.
(författare)
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Public Provision of Private Goods, Self-Selection, and Income Tax Avoidance
- 2016
-
Ingår i: Scandinavian Journal of Economics. - : Wiley. - 0347-0520 .- 1467-9442. ; 118:4, s. 666-692
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Tidskriftsartikel (refereegranskat)abstract
- Redistributive taxation should benefit those with low earnings capacity rather than those who choose a lower income to obtain tax savings. Several contributions have highlighted how public provision of work complements can discourage people from lowering labor supply to diminish taxable income. We show how tax avoidance, previously neglected, can alter the conclusions regarding public provision. Tax avoidance breaks the link between labor supply and reported income. An agent reducing his reported income to escape taxes might no longer forego a publicly provided labor complement, because he can now lower his income by avoiding more rather than working less.
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| 38. |
- Blomquist, Sören, et al.
(författare)
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Public provision of private goods, self-selection and income tax avoidance
- 2011
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- Several contributions in the optimal taxation literature have emphasized that, when individuals. preferences are not separable between leisure and other goods, it is desirable to supplement a nonlinear income tax with public provision of private goods. Moreover, it has also been shown that the choice between a topping-up and an opting-out scheme depends on whether the publicly provided good is a complement or substitute with leisure, with opting-out (topping-up) being the preferred scheme for goods which are substitutes (complements) for labor. In this paper, using the self-selection approach to tax analysis, we revisit these results in the presence of tax avoidance, and investigate how public provision interacts withthe agents.incentives to engage in tax avoidance. Three results are obtained. First, we show that tax dodging opportunities imply that non-separability between labor and other goods is neither a necessary nor a sufficient condition to make public provision of private goods a welfare-enhancing policy instrument. Second, we show how tax dodging opportunities limit the scope for using topping-up provision schemes as a redistributive device. Finally, we show that, for most of the public provision schemes previously analyzed in the literature, being a welfare-enhancing policy instrument goes hand in hand with weakening the agents.incentives to shelter income from the tax authority. However, we also point out an important exceptionto this pattern.
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| 39. |
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| 40. |
- Casarico, Alessandra, et al.
(författare)
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Intergenerational transmission of skills during childhood and optimal public policy
- 2015
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Ingår i: Journal of Population Economics. - 0933-1433 .- 1432-1475. ; :28, s. 353-372
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Tidskriftsartikel (refereegranskat)abstract
- The paper characterizes the optimal tax policy and the optimal quality of day care services in a OLG model with warm-glow altruism where parental choices over child care arrangements a effct the probability that the child becomes a high-skilled adult in a type-specific way. With respect to previous contributions, optimal tax formulas include type-specific Pigouvian terms which correct for the intergenerational externality in human capital accumulation. Our numerical simulations suggest that a public policy that disregards the effects of parental time on children's human capital entails a welfare loss that ranges from 0.2% to 5.7% of aggregate consumption.
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| 41. |
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| 42. |
- Gahvari, Firouz, et al.
(författare)
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The Friedman rule in an overlapping-generations model with nonlinear taxation and income misreporting
- 2014
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Ingår i: Journal of Public Economics. - : Uppsala universitet. - 0047-2727 .- 1879-2316. ; 119, s. 10-23
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Tidskriftsartikel (refereegranskat)abstract
- This paper models a two-period overlapping-generations economy with money populated with individuals of different skills. They face a nonlinear income tax schedule and can engage in tax evasion. Money serves two purposes: the traditional one, modeled through a money-in-the-utility-function; it also facilitates tax evasion. The main message of the paper is that income tax evasion in this framework leads to the violation of the Friedman rule. The paper also shows that even in the absence of tax evasion, when optimality requires differential commodity taxation, complementarity of real cash balances and labor supply does not guarantee the optimality of the Friedman rule as a boundary solution. An additional assumption is required.
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| 43. |
- Jordahl, Henrik, 1971-, et al.
(författare)
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Optimal Utilitarian Taxation and Horizontal Equity
- 2005
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Ingår i: Journal of Public Economic Theory. - : John Wiley & Sons. - 1097-3923 .- 1467-9779. ; 7:4, s. 681-708
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Tidskriftsartikel (refereegranskat)abstract
- We impose a horizontal equity restriction on the problem of finding the optimal utilitarian tax mix. The horizontal equity constraint requires that individuals with the same ability have to pay the same amount of taxes regardless of their preferences for leisure. Contrary to normal findings, we find that a good that is complementary to leisure can be encouraged by the tax system and that a good that normally should be discouraged by the tax system can be subsidized even if the economy is composed of only two private commodities plus leisure. Also, the marginal effective tax rate can be different from zero at the top of the ability distribution when the tax mix obeys the horizontal equity constraint.
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| 44. |
- Jordahl, Henrik, et al.
(författare)
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Optimal utilitarian taxation and horizontal equity
- 2002
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- We impose a horizontal equity restriction on the problem of finding the optimal utilitarian tax mix. The horizontal equity constraint requires that individuals with the same ability have to pay the same amount of taxes regardless of their preferences for leisure. Contrary to normal findings, we find that a good that is complementary to leisure need not be discouraged by the tax system, and that a good that normally should be discouraged by the tax system need not be taxed at a positive rate even if the economy is composed of only two private commodities plus leisure. Similarly, the marginal effective tax rate need not be equal to zero at the top when the tax mix obeys the horizontal equity constraint.
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| 45. |
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| 46. |
- Micheletto, Luca
(författare)
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Optimal nonlinear redistributive taxation and public good provision in an economy with Veblen effects
- 2009
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Rapport (övrigt vetenskapligt/konstnärligt)abstract
- This paper deals with the consequences of the assumption of negatively interdependent preferences for the shape of the optimal nonlinear income tax and the effcient level of public good provision in a setting where the policy maker maximizes an inequality averse social welfare function and the agents’ market ability is private information. The analysis points out that the terms added in the tax formulas due to the presence of Veblen effects might justify a reduction in the optimal marginal tax rates faced by the different individuals. Also, the desirability of negative marginal tax rates cannot be ruled out. With respect to the issue of the optimal level of public good provision, we derive a modfied Samuelson rule and highlight the fact that the Veblen-based part of the formula might require to distort downwards the efficient level of public good provision.
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| 47. |
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| 48. |
- Persson, Lars, 1978-
(författare)
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Environmental policy and transboundary externalities : coordination and commitment in open economies
- 2008
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of an introductory chapter and four papers, which relate to environmental policy in the presence of transboundary environmental damage. Paper [I] concerns public policy in a multi-jurisdiction framework with transboundary environmental damage. Each jurisdiction is assumed large in the sense that its government is able to infuence the world-market producer price of the externality-generating good. This gives rise to additional incentives of relevance for national public policy in the non-cooperative Nash equilibrium. With the uncoordinated equilibrium as the reference case, the welfare effects from coordinated changes in public policy variables are analyzed. Paper [II] analyses welfare effects of coordinated changes in environmental and capital taxation in the presence of transboundary environmental externalities and wage bargaining externalities. In the wage bargaining between frms and labor unions, firms use the threat of moving abroad to moderate wage claims, which means that domestic policy infuences wage formation abroad. The specific framework implies welfare effects of policy coordination that correspond to each of the respective international interaction mentioned above. In paper [III], national governments face political pressure from environmental and industrial lobby groups, while pollution taxes are determined in an international negotiation. It is shown that a general increase in the environmental concern and the weight the governments attach to social welfare both tend to increase the pollution tax. However, allowing for asymmetries between the countries means that a general increase in the environmental concern has the potential to reduce the pollution tax. Paper [IV] studies national environmental policies in an economic federation characterized by decentralized leadership. The federal government sets emission targets for each member country, which are implemented by the national governments. Although all national governments have commitment power vis-à-vis the federal government, one of them also has commitment power vis-à-vis the other member countries. This creates incentives to act strategically toward the federal government, as well as toward other members.
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