The Efficiency of State Taxes

The states have increased their share of national revenue from about 16 per cent in the late 1980s to over 20 per cent. This shift may not have improved the efficiency of raising national taxation revenue. Eight taxes with total revenue in 1995–96 of $26.5 billion are considered. In order of revenue these are payroll tax, business franchise taxes, stamp duties, gambling taxes, government business enterprise taxes, financial institutions taxes, land tax and mineral taxes. Business franchise taxes fall on a few items of consumption that are already taxed heavily by the Commonwealth. Financial taxes and stamp duties are suspect because they are transactions taxes, not taxing economic activity directly. Two important state taxes—on payrolls and on land—have badly fractured bases. The pressure on the states to raise more revenue is continuing. In meeting their revenue requirements efficiently the short-term solution lies in substantial reforms of existing taxes, including repairing the bases of the payroll and land taxes, and removal or reduction of the least efficient ones. The longer term solution lies in the states having access to broader based taxes, particularly consumption.     

Money demand, the Cagan model, testing rational expectations vs adaptive expectations: The case of Turkey

This paper estimates the Cagan type demand for money function for Turkish economy during the period 1986:1–1995:3 and tests whether Cagan's specification fits the Turkish data using an econometric technique assuming that forecasting errors are stationary. This paper also tests the hypothesis that monetary policy was implemented in aiming to maximize the inflation tax revenue. Finally, the Cagan model is estimated with the additional assumption of rational expectations for Turkey for the considered period. First version received: March 1998/final version received: October 1998     

The Macroeconomic Outlook

This quarterly two-year forecast from the Access Economics Murphy (AEM) model updates that presented in the corresponding article in the 4th quarter 1991 issue of the Australian Economic Review.
As predicted in the previous forecast, the economy entered a slow recovery in the December quarter of 1991. Steady growth averaging close to 1 per cent per quarter is likely during 1992–93 and 1993–94.
Unemployment may peak at around 10 3/4 per cent in mid-1992, before slowly falling to a year-average level of around 9 per cent in 1993–94.
Under the influence of the recent recession, CPI inflation is likely to be around 2 per cent per annum on a year-on-year basis for both 1991–92 and 1992–93. With economic recovery, it is forecast to rise to 4.5 per cent per annum in 1993–94.
While the recession has helped bring the current account deficit down from near 6 per cent of GDP in 1989–90 to around 3 per cent for 1991–92, it will rise with economic recovery, and is forecast to exceed 5 per cent of GDP by 1993–94, compared with a sustainable level of 3 to 3 1/2 per cent.
The economic recovery is not proving to be as strong as forecast in One Nation.
However, there is a recovery clearly underway, and any further easing of monetary and fiscal policy risks prejudicing a substantial part of the recent impressive gains on inflation and creates a major medium-term problem for public finances.     

The Distribution of Top Incomes in Five Anglo‐Saxon Countries Over the Long Run

Taking five Anglo‐Saxon countries that have relatively similar backgrounds and tax systems – Australia, Canada, New Zealand, the UK and the USA – we see that the shares of the very richest exhibit a strikingly similar pattern, falling in the three decades after World War II, before rising sharply from the mid‐1970s onwards. The share of the top 1 per cent is highly correlated across Anglo‐Saxon countries, more so than with the share of the next 4 per cent. Controlling for country and year fixed effects, we find that a reduction in the marginal tax rate on wage income is associated with an increase in the share of the top percentile group. Likewise, a fall in the marginal tax rate on investment income (based on a lagged moving average) is associated with a rise in the share of the top percentile group.     

Lifetime Net Average Tax Rates in Australia Since Federation—A Generational Accounting Study

This paper presents estimates of average net payments to government, as a per cent of average lifetime labour earnings, for generations born in Australia since Federation (1901), based on historical data combined with several reasonable future scenarios covering fiscal policy, growth and demographic change. The results shed light on whether certain generations have been treated more favorably by the public sector than others this century. The main conclusion is that the average lifetime net tax rate will, under reasonable'assumptions, be of the order of 37–39 per cent for all currently living generations born since the mid-1930s.     

Aggregate profitability and income distribution in the UK corporate sector, 1963–1985

This paper analyses the secular and cyclical behaviour of the rate of profit for the UK corporate sector from 1962 to 1985, using the growth accounting framework developed by Weisskopf (1979) for the USA, and the labour share decomposition of Henley (1987). The results show that the five per cent per annum decline in net profit rate in the UK over the period is explained in part by each of the three factors of declining profit share, declining capital productivity and, to a lesser extent, declining capacity utilization. As in the USA profitability peaks prematurely in each business cycle as a result of distributional pressure. Further decomposition of these components points to the importance of inadequate growth of real labour productivity as an explanatory factor, and to the inability of firms to protect profit share from the effect of the pre-1979 growing employer labour tax burden. The post-1980 profit revival in the UK is not explained by a ‘breakthrough’ in terms of an improved growth rate of labour or capital productivity but rather by the sheer length of the sustained business upswing and, as yet, absence of the usual midcycle upward pressure on labour share.     

The Macroeconomic Outlook

A slow recovery is expected from the current recession. Since reaching a trough in the September quarter of 1990, real gross domestic product (GDP) has followed a flat path which is likely to continue through to the September quarter of 1991. A slow recovery may then commence in the December quarter of 1991. This is consistent with real GDP growth of -0.9 per cent in 1990-91 followed by 2.4 per cent in 1991-92 and around 3 per cent per annum to the mid- 1990s compared with 'normal' growth of 2.5 per cent per annum.
This recovery is likely to see the unemployment rate at over 10 per cent for most of 1991-92, before moving to around 8 per cent by the mid-1990s.
Inflation may fall sharply from a peak of 8.0 per cent in 1989-90 to a trough of 3 to 4 per cent in 199 1–92, due to the recession and movements in oil prices. With a slow recovery, inflation may increase to 4 to 5 per cent per annum in the medium term.
The current account deficit has fallen from 5.9 per cent of GDP in 1989-90 to a likely level of 4.1 per cent in 1990-91, but part of this gain is cyclical rather than structural. Thus the deficit is expected to increase to around 5 per cent during recovery and remain flat to the mid- 1990s, implying steady increases in the ratio of foreign debt to GDP.
Looser monetary policy would erode part of the forecast sustained reduction in inflation. Looser fiscal policy would lead to a higher current account deficit.     

Flattening the Effective Marginal Tax Rate Structure in Australia: Policy Simulations Using the Melbourne Institute Tax and Transfer Simulator

This article uses the Melbourne Institute Tax and Transfer Simulator to examine the effects of a reduction in the means‐tested benefit taper, or withdrawal, rates in Australia to 30 per cent. That is, all taper rates of 50 per cent and 70 per cent in the March 1998 benefit system are reduced to 30 per cent, while leaving all basic benefit levels unchanged. This change is therefore expected to ‘flatten’ the tax structure by reducing the high marginal tax rates applying to those with relatively low incomes and increasing the marginal tax rates of medium incomes. Simulations in which all individuals are assumed to remain at their pre‐reform labour supply levels are compared with behavioural simulations in which the majority of individuals are free to adjust the number of hours worked. The results reflect only the supply side of the labour market. The database used is the 1997‐98 Survey of Income and Housing Costs, so that weekly incomes are based on the financial year 1997‐98. The comparison shows that, for sole parents, accounting for behavioural effects of the reform results in a lower estimated expenditure for government, whereas for couples, accounting for behavioural effects results in a higher estimated expenditure.     

Taxation and political business cycles in EU economies

This paper examines whether incumbent national governments of 11 member states of the European Union manipulated the tax policy instruments at their disposal in order to create national political business cycles, opportunistic or partisan. The empirical evidence, based on data concerning the 1965 to 1997 period, does not support this hypothesis. Rather, it appears that governments have pursued stabilization policies.     

Some Effects of Reducing Excess in Infrastructure Charges on the Export Coal Industry*

Excess rail freight and port charges on the Australian export coal industry amount to over 10 per cent of export prices and represent a form of ad valorem tax. Efficiency and distributional effects of removing the excess charges are assessed using a quantitative commodity model and a qualitative general equilibrium assessment. Removal of the excess charge would increase production by 29 per cent by the year 2000, slightly reduce upon prices and generate national efficiency gains of over $150 million a year. The mining industry and the Federal government gain and the State governments lose     

THE DISTRIBUTION OF INCOME BETWEEN SOCIO-ECONOMIC GROUPS IN THE NETHERLANDS

This paper reports on a study designed to improve the information on income flows and income distribution in the Netherlands national accounts by building a bridge between the national accounts and income tax statistics. The methods used are described in some detail, and the significance of the results obtained is discussed. The figures show rather substantial fluctuations in the share of proprietors relative to that of wage earners. This result is not unexpected, since the share of proprietors is much more sensitive to the level of economic activity, but it does limit the usefulness of the figures for short-run economic policy determination. In the longer run, however, they do show what the development of the average incomes of the various social groups has been, and to what extent government action has contributed to that development.     

企业行为约束下技术创新所得税激励政策效应研究

技术创新所得税激励政策效应的发挥不但取决于政策本身的制度设计,还取决于企业投资行为对税收政策的敏感性。技术创新所得税激励政策作为制度驱动,既受到企业自身行为的约束,又与企业内部研发驱动机制相互作用。在企业行为理论框架下,运用随机效应模型,以2009—2013年中国Ａ股上市公司数据为样本,对企业行为约束下中国技术创新所得税激励政策效应进行了理论分析和实证检验。结果发现,税收优惠政策形成的税收补贴通过转化为企业内部资源、降低研发投资风险,使得企业内部驱动机制对研发支出的积极作用增强;所得税激励政策本身并未对企业技术创新活动产生显著的激励作用。     

基于灰色残差模型的中国税收收入预测

税收是国家财政收入的重要来源,准确的税收预测结果对于制定各项经济政策具有非常重要的意义。为提高中国税收收入的预测精度,适应资源配置、收入再分配和宏观经济调控的需求,在传统灰色预测技术的基础上,建立了残差灰色预测模型,并通过实例分析验证了该模型的实用性和精确性。     

Effluent taxes,market structure,and the rate and direction of endogenous technological change

This paper studies the effects of effluent taxes on firms’ allocation of resources to cost-reducing and emission-reducing R&D, and on entrepreneurs’ decisions to develop new goods and enter the market. A tax set at an exogenous rate that does not depend on the state of technology reduces growth, the level of consumption of each good, and raises the number of firms. The induced increase in the variety of goods is a benefit not considered in previous analyses. In terms of environmental benefits, the tax induces a positive rate of pollution abatement that offsets the “dirty” side of economic growth. A tax set at an endogenous rate that holds constant the tax burden per unit of output, in contrast, has ambiguous effects on growth, the scale of activity of each firm and the number of firms. Besides being novel, the potential positive growth effect of this type of effluent tax is precisely what makes this instrument effective for welfare-maximizing purposes. The socially optimal policy, in fact, requires the tax burden per unit of output to equal the marginal rate of substitution between the growth rate of consumption and abatement. Moreover, a tax/subsidy on entry is needed, depending on whether the contribution of product variety to pollution dominates consumers’ love of variety.      

Sharing the Burden? Empirical Evidence on Corporate Tax Incidence

This study investigates the direct incidence of the corporate income tax (CIT) through wage bargaining, using an industry‐region level panel dataset on all corporations in Germany over the period 1998–2006. For the first time we account for employment effects which result from tax‐induced wage changes. Workers share in reductions of the CIT burden; yet, the net effect of wage bargaining on the corporate wage bill, after an exogenous €1 decrease in the CIT burden, is as little as 19–28 cents. This is about half of the effect obtained in prior literature focussing on wages alone.     

Impacts of an EC carbon/energy tax and deregulating thermal power supply on CO2, SO2 and NOx emissions

Emission of CO₂, SO₂ and NO_x are all closely linked to the burning of fossil fuels. Here we report on simulations done by linking a Sectoral European Energy Model (SEEM), covering energy demand in nine Western European countries, with the emission-transport-deposition model RAINS developed by IIASA. The study analyses emissions of CO₂, SO₂ and NO_x, deposition of sulphur and nitrogen and the extent of areas where the critical load for sulphur is exceeded in year 2000 under four different energy scenarios. Two different sets of future behavioural patterns for the thermal electric power production sector are considered. In one regime, called the plan-efficient regime, the sector is assumed to follow official plans with regard to investment in new capacity. In the other regime, called the cost-efficient regime, the thermal power sector is assumed to behave in a cost minimizing manner. The effects of the proposed EC carbon/energy tax are studied under both regimes, giving rise to altogether four scenarios.In both regimes the effect of the EC tax is to reduce emissions by between 6 and 10 per cent in year 2000 relative to the scenarios without the tax. A change of regime, from the regulated, plan-efficient regime to the market-based, cost-efficient regime, will, by itself, reduce emissions of CO₂ and NO_x by approximately 3 per cent, while SO₂ emissions are reduced by 13 per cent. The EC tax will reduce sulphur deposition by more than 5 per cent in the nine model countries under the plan-efficient regime. A change of regime further reduces the total deposition by 9 per cent. The area where depositions exceed the critical load is reduced by approximately 6 per cent in year 2000 by the tax in both regimes. Changing from the plan-efficient to the cost-efficient regime has a similar impact.Although the emission reductions due to the EC tax may seem modest, they are shown to have a sizeable effect on the technological abatement costs of reaching targets like those prescribed in the Sofia protocol on the stabilisation of NO_x emissions, and the Helsinki protocol on SO₂ emission reductions. This is part of what can be considered to be secondary benefits of the EC carbon/energy tax.     

Intra-Jurisdictional Tax Competition

While much has been written about inter-jurisdictional competition for tax revenues, especially concerning the choice between harmonization and competition, the literature has largely ignored intra-jurisdiction issues. The few articles examining this issue focus on how lower level governmental entities react to the tax decisions of a national government. However, in some instances, multiple co-equal taxing authorities might share the same base. These bodies face a dilemma over whether to harmonize their policies or to compete. We present a simple model of revenue maximizing tax authorities and derive the conditions under which harmonization dominates competition.     

Viewing Tax Policy Through Party‐Colored Glasses: What German Politicians Believe

Abstract. The process of globalization has an important impact on national tax policies. Most of the literature does not focus directly on the political decision‐making process and assumes that the desired tax policy is responding to objective underlying tradeoffs. Based on an original survey of members of the German national parliament (Bundestag) in 2006/07, we document a strong ideological bias among policy‐makers with respect to the perceived mobility of international tax bases (real capital and paper profits). Ideology also influences, directly and indirectly, the perceived national autonomy in tax setting and preferences for a European Union minimum tax for companies. There seems little consensus as to what the efficiency costs of capital taxation in open economies are, even though our survey falls in a period of extensive debate about, and actual adoption of, a company tax reform bill in Germany.     

Fiscal policy and national saving

This paper uses structural vector autoregressions along with structural measures of fiscal policy to measure the dynamic impact of fiscal policy shocks on the output gap and national saving. Positive shocks to government purchases and negative shocks to real net taxes are found to increase the output gap. Positive shocks to the government's structural surplus increases national saving although the effects are small. Positive shocks to government purchases are found to substantially reduce national saving. Negative shocks to real net tax revenues as a share of potential GDP have a small negative impact on national saving.     

The Macroeconomic Outlook

A slow recovery, commencing in the December quarter of 1997, is expected from the current recession. Overall, gross domestic product (GDP) may increase by 2.8 per cent in the year to the June quarter of 1992, and continue to increase at a similar rate thereafter.
This subdued recovery is likely to see the unemployment rate at over 70 per cent to the end of 1992, before moving down slowly to around 8.5 per cent by the mid-1990s.
Consumer price index (CPI) inflation may fall sharply from a peak of 8.0 per cent in 1989-90 to a trough of under 3 per cent in 1997-92, due to the recession and movements in oil prices. With a slow recovery, inflation may then increase to 5 per cent per annum in the medium term.
The current account deficit has fallen from 6.0 per cent of GDP in 1989-90 to 4.7 per cent in 1990-91, despite a fall in the terms of trade of 5 per cent. However, this has been due to the cyclical downturn. With a slow recovery in demand, and rising real labour costs hampering expansion in export and import-competing industries, the current account deficit may once again reach 6 per cent of GDP by the mid-1990s, implying steady increases in the foreign debt-to-GDP ratio.
This forecast assumes monetary policy targets an inflation rate of 5 per cent per annum. Any further easings in monetary policy may undermine the credibility of the inflation objective with the result that the trade weighted index (TWI) exchange rate may drop sharply from 59.