GASOLINE PRICES,GOVERNMENT SUPPORT,AND THE DEMAND FOR HYBRID VEHICLES IN THE UNITED STATES*

We analyze the determinants of hybrid vehicle demand, focusing on gasoline prices and income tax incentives. We find that hybrid vehicle sales in 2006 would have been 37% lower had gasoline prices stayed at the 1999 levels, and the effect of the federal income tax credit program is estimated at 20% in 2006. Under the program, the cost of reducing gasoline consumption was $75 per barrel in government revenue and that of CO₂ emission reduction was $177 per ton. We show that the cost effectiveness of federal tax programs can be improved by a flat rebate scheme.     

THE ECONOMICS OF INTRODUCING WINE INTO GROCERY STORES

The repeal of the Prohibition Act in 1933 introduced many state‐specific regulations in wine markets. For example, 15 states currently have laws that restrict wine sales in grocery stores. Several of these states have proposed changes that would expand the distribution of wine; however, the proposals have met significant resistance from key stakeholders and none have resulted in legislation. It is widely expected that additional proposals will be initiated, but with more attention given to mechanisms that would address some of the transitional issues. A simulation model is developed here to assess the likely economic effects of introducing wine into grocery stores in New York State. Results indicate that tax revenue would increase by $22 million annually, revenue for in‐state wineries would increase by approximately 13%, and revenue for liquor store owners is calculated to fall by 28%. Simulation results are subsequently used to develop a framework for evaluating the transitional costs of policy reform in this highly regulated industry. (JEL K23, Q18)     

The revenue potential of a financial transaction tax for US financial markets

This paper estimates the revenue potential of a financial transaction tax (FTT) for US financial markets. We focus on analyzing the revenue potential of the Inclusive Prosperity Act that was introduced in the US House of Representatives in 2012 and the US Senate in 2015. The tax rates stipulated in this Act include 0.5% (50 basis points (bps)) for all stock transactions, 0.1% (10 bps) for all bond transactions and 0.005% (0.5 bps) on the notional value of all derivative trades. We examine three sets of evidence to generate potential revenue estimates: 1) the levels of transaction costs in US financial markets over time and within the range of financial market segments; 2) the extent of trading elasticities under various trading conditions; and 3) the current level of trading activity in US financial markets. Based on this evidence, we conclude that a US FTT operating at the tax rates stated above would generate about $220 billion per year, equal to about 1.2% of the current US GDP.     

Ramifications of a Flat Tax—Shifting the Burden to the Middle Class

An alternative to the current US tax system would be a flat tax. According to its supporters, the flat tax would decrease the complexity of the tax system. Opponents contend that the flat tax will shift the tax burden to the middle class. The current research tested the claim that the flat tax will shift the tax burden to the middle class by developing simulations of two flat tax proposals, the Steve Forbes Plan and the Hall and Rabushka Plan, and then examining the change in the tax burden for different income levels as compared to the current tax system. The results show that both plans shift more of the tax burden to middle income class taxpayers than under the current US tax system.

REEXAMINING THE BORDER TAX EFFECT: A CASE STUDY OF WASHINGTON STATE

Without an income tax, Washington State relies heavily upon its sales tax revenue to fund public goods and services. Bordering Idaho and especially Oregon, where the sales tax is substantially lower, the juxtaposition of the different tax structures generates the border tax effect in Washington's border counties. Controlling for unobservable county‐specific characteristics and spatial autocorrelation, we find that the price elasticity generated by the sales tax discrepancy over the years 1992–2006 is ?3.11. We estimate that elimination of the sales tax differential between Washington and its neighboring states would generate tax revenue in excess of $145 million at the state level and over $21 million at the county level in border counties. (JEL C23, D12, E62, H71)     

Federal excise tax increase and its effects on U.S. tobacco production

Using the equilibrium displacement model, we examine the impact on tobacco farms of the decrease in cigarette sales due to the increase in prices induced by the federal excise tax hike that went to effect on April 1, 2009. First we estimate the effect of the increase in the federal excise tax on cigarette price and sales. Then, we estimate the effect of the decrease in cigarette sales on tobacco farms. Results suggest that under a scenario of market power implied by a conjectural elasticity of 0.11 manufactures could charge $0.23 per pack more than the federal excise tax increase, which would be enough to offset the estimated 1.42 billion-pack sales decline and to maintain the industry’s revenue net of taxes. This decrease in cigarette sales induced by the increase in the federal excise tax would result in the tobacco leaf output and price declining by 2.85 and 0.41%, respectively. As a result, the tobacco leaf sector would sustain a loss of 3.25% in revenue, amounting to nearly $48.4 million.     

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.     

PROHIBITION VERSUS TAXATION: RECONSIDERING THE LEGAL DRINKING AGE

The legal drinking age targets a group at a high risk of alcohol-related problems. This paper argues that taxation could achieve the same benefits as the legal drinking age at a substantially lower social cost. Existing empirical research suggests that simultaneously lowering the legal age to 18 and taxing alcohol purchases at between 12 to 86 percent of the current price would achieve the same results as the current legal age. Levying a special teen tax only on young adults would minimize its social costs. Teen tax revenues between $564 million to $4.03 billion measure the net social gain of replacing the current prohibition on young adults' alcohol purchases with a taxation policy.     

Examining Federal Impact Aid's Reimbursement for Local School Districts

In 1950, Congress created the Federal Impact Aid Program to compensate local school districts for lost tax revenue or increased burdens resulting from federal activities, including the placement of military bases within school districts. Currently, Impact Aid provides nearly $1 billion per year in subsidies to approximately 1400 local school districts that enroll over 1.2 million eligible children. This current study examines the adequacy of the funding in the Impact Aid program as an example of how the existing public finance literature provides the tools to help policy makers make informed decisions. (JEL H0 , H7 , 12 )     

TAXING HEALTH INSURANCE: HOW MUCH IS ENOUGH?

The Reagan administration has again proposed in 1984 to limit the tax exemption on health-insurance premiums. Objectives of the proposal are to curtail rising health costs by reducing insurance coverage—and hence medical-care use—and to raise revenues to offset the large federal deficit. The change would have little effect on either dimension. Most likely, consumer response would reduce dental, drug, and eyeglass insurance, but would leave coverage for hospital and doctor care—the most bothersome health-cost sectors—essentially unaffected. Larger tax changes which are structured differently possibly could reduce health costs dramatically and raise up to $27 billion a year in new tax revenues.     

Environmental Funds,Public Abatement,and Welfare

This paper addresses some features of environmental funds that the government uses to finance public abatement with pollution tax revenue or tariff revenue. I find that when the pollution tax rate and the tariff rate are jointly chosen optimally, then the optimal pollution tax rate is higher than the Pigouvian tax rate under public abatement financed by tariff revenue, and lower when public abatement is financed by pollution tax revenue. Furthermore, I show that the optimal tariff rate is positive regardless of which tax revenue is used to finance public abatement. These results are relevant for countries where the government seeks revenues earmarked for the financing of environmental funds.     

The effects on agriculture in the United States of an oil import fee

This paper focuses on the effect that a crude oil import fee would have on the various producing sectors, consuming sectors and household categories in the United States where the interrelationships between these entities is explicitly considered. Special attention is given to the agricultural sectors of the economy. Thus, in the context of a general equilibrium model, the effect of a $5.00 per barrel import fee on the producing sectors in general and the three agricultural sectors plus forestry in particular, on the consuming sectors, on households and on the government is calculated. Over the period 1984–90 with such an import fee (relative to the absence of a crude–oil import fee), the model results suggest that there will be a reduction in output by all producing sectors (except the crude-oil industry) by about $13,924 billion, there will be a fall in the consumption of goods and services by about $318 million and there will be a decline in aggregate social welfare (measured as utility) by about $208 mill ion. The government will realize an increase in revenue of about $3,622 billion. The agricultural sectors in the aggregate can expect to see a fall in output of $769 million with an attendant increase in the price of its goods as a consequence of the oil import fee.     

"可税与否"未改变我国GDP与税收的基本关系——基于1978～2005年数据的实证检验

文章对我国GDP构成中不可税部分加以剔除,计算出1978~2005年可税GDP。使用相关性分析和时间序列分析的方法,研究了我国1978~2005年税收和可税GDP的总量及增量之间的关系,以及税收与可税GDP增长率之间的关系。研究结果发现:税收、可税GDP的总量和增量是协整的,并且具有高度的相关性。可税GDP增长率与税收增长率的相关性微弱,并且实际GDP增长率对实际税收增长率的解释能力很低。对照剔除前的计算结果,文章发现对GDP不可税部分的剔除并没有明显改变税收与GDP在总量、增量和增长率方面的基本关系。     

When does a carbon tax on fossil fuels stimulate biofuels?

A carbon tax is an efficient economic instrument to reduce emissions of carbon dioxide released from fossil fuel burning. If designed properly, it could also help significantly to promote renewable energy. Using a multi-sector, multi-country computable general equilibrium model this study investigates under what circumstances a carbon tax would help stimulate penetration of biofuels into the energy supply mix for road transportation in various countries and regions around the world. This study shows that a carbon tax cum biofuel subsidy policy, where a carbon tax is introduced to fossil fuels and part of the tax revenue is used to finance the biofuel subsidy, would significantly help stimulate market penetration of biofuels. On the other hand, a carbon tax alone policy, where the entire tax revenue is recycled to households through a lump-sum transfer, does not help stimulate biofuels significantly even at higher tax rates. Although the carbon tax cum subsidy policy would cause higher loss in economic output at the global level as compared to the carbon tax alone policy, the incremental loss is relatively small. The key policy insight drawn from the study is that if a carbon tax were to be implemented in an economy for the purpose of climate change mitigation, recycling part of its revenue to finance biofuel subsidies would significantly help stimulate biofuels.     

Laffer strikes again: Dynamic scoring of capital taxes

We set up a neoclassical growth model extended by a corporate sector, an investment and finance decision of firms, and a set of taxes on capital income. We provide analytical dynamic scoring of taxes on corporate income, dividends, capital gains, other private capital income, and depreciation allowances and identify the intricate ways through which capital taxation affects tax revenue in general equilibrium. We then calibrate the model for the US and explore quantitatively the revenue effects from capital taxation. We take adjustment dynamics after a tax change explicitly into account and compare with steady-state effects. We find, among other results, a self-financing degree of corporate tax cuts of about 70–90% and a very flat Laffer curve for all capital taxes as well as for tax depreciation allowances. Results are strongest for the tax on capital gains. The model predicts for the US that total tax revenue increases by about 0.3–1.2% after abolishment of the tax.     

Trade policy reform and international trade tax revenue in Uganda

This paper contributes to the literature on the relationship between tariff reform and customs tax revenue by explicitly capturing the institutional features of decision making in the econometric modeling. The results show that exchange rate depreciation has had pass through effects to the domestic market price of imports which reduces trade tax revenue to GDP ratio in the long run, though it increases trade tax revenue in the short term. There are also seasonal patterns in the short term trade tax payment. The results point to some scope to harness the benefits associated with trade policy reform without having to worry a lot about its effects on trade (and overall) tax revenue. In fact, it would be possible to realise modest increases in trade tax revenue if the exemption regime were to be reviewed and if there was capacity to contain the disruptive impact of sharp exchange rate depreciations.     

Export Product Diversification and Public Revenue’s Dependence on Resource Revenue

ABSTRACT

This article tries to reconcile two major priorities for countries, notably resource-rich countries on the international development agenda: export product diversification with a view to helping them better integrate into the multilateral trading system and tax reforms with a view to reducing the dependence of total public revenue on resource revenue, and therefore developing a more sustainable stream of public revenue. The analysis therefore involves examining empirically the impact of export product diversification on countries’ overall public revenue dependence on resource revenue, this dependence being measured by the share of resource revenue in total public revenue. The empirical analysis shows that export product diversification exerts a negative and significant impact on resource revenue share of total public revenue, and therefore could help facilitate tax reforms towards lower resource revenue dependence. Hence, while tax policy is the main policy tool to conduct tax reforms, export product diversification would likely contribute to facilitating the implementation of these reforms.     

The Property Tax Incidence Debate and the Mix of State and Local Finance of Local Public Expenditures

Many states in the US have in recent years changed the mix ofstate and local revenue sources used to finance local publicexpenditures, especially primary and secondary education, withlocal property taxes being replaced by various sources of statetax revenue. This article examines the desirability of sucha tax substitution, focusing on the implications of the long-standingdebate between the "benefit tax" and "capital tax" views ofthe incidence of the tax. It also includes a discussion of somerecent research that elaborates the capital tax view of theproperty tax. (JEL codes: H10, H21, H22, H71)     

The journey to meaningful use of electronic health records

The American Recovery and Reinvestment Act and its important Health Information Technology Act provision became law on February 17, 2009. Commonly referred to as "The Stimulus Bill" or "The Recovery Act," the landmark legislation allocated $787 billion to stimulate the economy, including $147 billion to rescue and reform the nation's seriously ailing health care industry. Of these funds, $19 billion in financial incentives were earmarked for the relatively short period of 5 years to drive reform through the use of advanced health information technology (HIT) and the adoption of electronic health records (EHRs). he incentives were intended to help health care providers purchase and implement HIT and EHR systems, and the HITECH Act also stipulated clear penalties would be imposed beyond 2015 for both hospitals and physician providers who failed to adopt use of EHRs in a meaningful way. Nurses will be integral to achieving a vision that will require a nationwide effort to adopt and implement EHR systems in a meaningful way.     

PUBLIC INVESTMENT,TAX EVASION,AND THE WELFARE EFFECTS OF A TARIFF REFORM

Contrary to the case considered in literature, the experience of developing countries indicates that the tariff reforms have not been revenue neutral due to the heavy dependence of developing countries on trade taxes and pervasive tax evasion. In contrast to the plausibility of a welfare loss shown by the current literature, when the adverse effect of the loss of tariff revenue on public investment is factored in, the welfare outcome of the tariff reforms of past few decades turns out to be much more pessimistic. The constraints imposed by tariff dependence and tax evasion imply that future tariff reforms in these countries should be undertaken after strengthening their domestic tax system and augmenting the ability of their governments to fight tax evasion. For countries of sub‐Saharan Africa, where such reforms are likely to be concentrated, this would need planning and capacity building over a longer time horizon. (JEL D61, D62, F13, H26)