Efficiency wages and income taxes

The paper was written during a visit at the Ludwig-Maximilian-University of Munich in the summer of 1988. The hospitality of this institution, as well as the financial support from a Ruhrgas Scholarship under the West German Norwegian Scholarship Scheme, is gratefully acknowledged. Participants at various seminars have given useful comments and criticism. I am also grateful to two anonymous referees for their comments to an earlier version of the paper.     

Optimum income taxation and layoff taxes

This paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment. It is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income. The optimal layoff tax is equal to the social cost of job destruction, which amounts to the sum of unemployment benefits (that the state pays to unemployed workers) and payroll taxes (that the state does not get when workers are unemployed).     

Growth, income taxes and consumption aspirations

In a Barro-type economy with exogenous consumption aspirations, raising income taxes favors growth even in the presence of lump-sum taxes. Such a policy is compatible with the behavior of private consumption, income taxes and growth rates observed in actual economies.     

Public investment criteria,insurance markets,and income taxes

The evaluation of small government investments is studied in a one-commodity, two-period world with risk and income taxation, assuming both complete and incomplete insurance markets. When marginal personal tax rates differ or markets are incomplete, there are at least two interpretations of the assumption that the distribution of income is optimal. The correct discount rate for riskless investment depends on which interpretation is chosen. The correct adjustment for risk generally does not. The use of nonmarket information - relating the returns from the proposed investment to those from ongoing activities - to compute this adjustment is explored.     

新时期增加农民收入的几点建议

改革开放以来,我省农民收入大幅度增长,生活水平显著提高,但近年来,随着市场经济的发展和改革开放的深化,农民收入出现了增长速度趋缓、增收难度加大的情况,1997年以来,农产品供求格局发生重大变化,生产相对过剩,出现买方市场,农民人均纯收入平均每年仅增长6.8%,增收难度加大,主要表现为。     

The impact of changing skill levels on optimal nonlinear income taxes

The impact of changing an individual's skill level on the solution to a finite population version of the Mirrlees optimal nonlinear income tax problem with quasilinear-in-leisure preferences is investigated. It is shown that it is possible to sign the directions of change in everyone's optimal consumptions and optimal marginal tax rates in response to such a change.     

龙岩市农民增收问题的思考

一、制约农民增收因素分析 龙岩市农民人均收入从1978年的134元增加到2000年的2959元,期间增长了21倍,年均递增15.1％。但近年来农民年人均增幅仅为4％,农民收入呈现缓慢增长态势。制约农民增收的主要因素有:     

Redistributive choices and increasing income inequality: experimental evidence for income as a signal of deservingness

We explore the relation between redistribution choices, source of income, and pre-redistribution inequality. Previous studies find that when income is earned through work there is less support for redistribution than when income is determined by luck. Using a lab experiment, we vary both the income-generating process (luck vs. performance) and the level of inequality (low vs. high). We find that an increase in inequality has less impact on redistribution choices when income is earned through performance than when income results from luck. This result is likely explained by individuals using income differences as a heuristic to infer relative deservingness. If people believe income inequality increases as a result of performance rather than luck, then they are likely to believe the poor deserve to stay poor and the rich deserve to stay rich.     

Carbon-reducing taxes and income inequality: general equilibrium evaluation of alternative energy taxation in Taiwan

Recently, several studies have been a detailed evaluation of the economic implications of energy taxation as a policy instrument to conserve energy and reduce carbon emissions. However, little attention has been devoted to inquiring about the economic implications of energy taxation in the newly industrialized countries (the so-called NICs). In this paper, we use a multisector, multihousehold computable general equilibrium model to assess the distributional effects of alternative energy taxation on the Taiwan economy. The counterfactual simulation technique is applied to investigate the income distribution implications of: (1) an increase in the import taxes of crude oil; and (2) an increase in the excise taxes of petroleum products. Our empirical results basing on Taiwan's data show that both energy taxes increase government revenue and the Gini coefficient, but reduce net value-added, private consumption, disposable income and equivalent variation. A raise in the Gini coefficient implies that there is a worsening in the distribution of income. The lowest income group suffers relatively large welfare and income loss, but the highest income group suffers a relatively small welfare and income loss. The distributional effects differ from household to household depending on the composition of their total consumption and the source of their factor income. Our findings reveal that the energy tax appears to be mildly regressive, there are broadly consistent with those cases of developed countries reported in previous studies.     

An empirical analysis of intergovernmental tax interaction: the case of business income taxes in Canada

Both federal and provincial governments in Canada levy corporate taxes on businesses in their jurisdictions, which potentially gives rise to horizontal and vertical tax externalities within the federation. Using a simple model of interdependent tax choices, we estimate tax-setting functions for the federal government, Ontario, Quebec, and an aggregate of the remaining eight provinces. We find evidence of significant vertical and horizontal tax interactions. Provincial tax rates respond negatively to the federal tax rate, while at least some provinces increase their tax rates in response to increases in the tax rates of other provinces. JEL Classification: H25, H7
Une analyse empirique de l'interaction fiscale entre gouvernements: le cas des impôts sur les revenus d'affaires au Canada. Au Canada, les gouvernements fédéral et provinciaux collectent des impôts sur le revenu de sociétés sous leur jurisdiction. Voilà qui peut donner lieu à des effets externes horizontaux et verticaux à l'intérieur de la fédération. A l'aide d'un modèle de choix fiscaux interdépendants, les auteurs calibrent les fonctions d'imposition du gouvernement fédéral, des gouvernements du Québec et de l'Ontario, et d'une entité composée des huit autres provinces. On montre que les effets verticaux et horizontaux d'interaction fiscale sont significatifs. Les taux d'imposition des provinces réagissent négativement au taux d'imposition fédéral, mais certaines provinces accroissent leur taux d'imposition en réponse à des accroissements dans les taux d'imposition d'autres provinces.     

Efficiency considerations and the exemption of food from sales and value added taxes

We evaluate efficiency considerations underlying the widespread exemption of food from sales and value added taxes and the implications for tax policy. Household and restaurant meals and both constant and increasing returns cases are examined. Higher taxes on food offset the non-taxation of time inputs into household production, even under constant returns to scale. With increasing returns, gains from taxing food are higher and amplified by subsidizing restaurant food and all marginal cost components of restaurant meals. On efficiency grounds, exemption of food from sales and value added taxes emerges as socially costly policy, especially under increasing returns.
Considérations d'efficacité et l'exemption de la nourriture dans les taxes de vente et les taxes sur la valeur ajoutée. Les auteurs examinent les questions d'efficacité qui soustendent l'exemption généralisée de la nourriture des taxes de vente ou des taxes sur la valeur ajoutée, ainsi que les implications qui en découlent pour la politique de taxation. On examine la consommation par les ménages et dans les restaurants à la fois pour le cas où les rendements sont constants et croissants. Des taxes plus élevées sur la nourriture compensent pour la non-imposition du temps en tant qu'intrant dans la production des ménages même quand il y a rendements constants à l'échelle. Quand on a des rendements croissants, les gains provenant de l'imposition de la taxe sur la nourriture sont accrus et amplifiés par la subvention à la nourriture de restaurant et toutes les composantes du coût marginal des repas au restaurant. Au plan de l'efficacité, l'exemption de la nourriture des taxes de vente ou des taxes sur la valeur ajoutée apparaît comme une politique socialement coûteuse, particulièrement quand les rendements sont croissants.     

Constitutions, regulations, and taxes: Contradictions of different aspects of decentralization

The paper confronts different aspects of decentralization: fiscal decentralization, post-constitutional regulatory decentralization, and constitutional decentralization – using a single dataset from the Russian Federation of the Yeltsin period as a politically asymmetric country and a variety of indicators. It finds no robust correlation between different decentralization aspects; moreover, three processes of devolution appearing in the same country at the same time seem to be driven by different (though partly overlapping) forces. Hence, a specific aspect of decentralization is hardly able to serve as a proxy for another one or for the overall decentralization process.     

A comparison of the poverty impact of transfers, taxes and market income across five OECD countries

This paper compares the poverty reduction impact of income sources, taxes and transfers across five OECD countries. Since the estimation of that impact can depend on the order in which the various income sources are introduced into the analysis, it is done by using the Shapley value. Estimates of the poverty reduction impact are presented in a normalized and unnormalized fashion, in order to take into account the total as well as the per dollar impacts. The methodology is applied to data from the Luxembourg Income Study database.     

论发展创意农业——黑龙江省农民增收的新途径

黑龙江省是农业大省,发展创意农业是黑龙江省农民增收的新途径。从创意农业的概念界定及特点出发,认为黑龙江省发展创意农业还处在初级阶段,可以从努力打造黑龙江创意农业园区、加大农业投入、完善创意农业保险机制、健全创意农业品牌建设激励机制、优化创意农业流通渠道和推进黑龙江省创意农业示范工程六个方面来发展创意农业,增加农民收入。     

Inequality reduction by income taxes: Just how much? An investigation for the Netherlands, 1914–1973

Data on the income distribution in the Netherlands since the introduction of the income tax in 1914 are used to calculate the extent of income redistribution through the progressive rate structure. Seven indexes of income equality are used, and their values after-tax are divided by the value before-tax. The extent of inequality reduction differs substantially between inequality indexes. Pearson and Kendall correlation coefficients of the time series are presented and again, the information diverges so widely that one may doubt the usefulness of the conventional summary statistics of income inequality.     

Welfare criteria for tax reforms: Efficiency aspects

This paper provides unexpected support to Nash's view of how bargaining determines the social choice. We first present a spatial model of electoral competition with probabilistic voting and a very close relation between voters' preferences and their choice probabilities. The outcome of the electoral competition game is then shown to be precisely the social alternative that maximizes a Nash-type social welfare function (theorem 1). This electoral outcome is also interpreted as a unanimity likelihood maximum (corollary 1). Within our framework, existence and uniqueness of such an outcome are guaranteed (corollaries 2 and 3).     

Efficient introduction of Pigovian taxes

This paper considers the dynamics of introducing pollution taxes when firms have to invest into abatement facilities. This accumulation of abatement capital, however, proceeds sluggishly. Therefore, actual policy proposals of pollution taxes consider a phased introduction. This paper considers the normative aspects of such a policy. More precisely, it proves that pollution taxes should be introduced radically rather than gradually.     

Efficiency,equality, income taxation and the brain drain: A second-best argument

This note conducts a second-best examination of the effect of the brain drain. If the size distribution of income is a welfare objective, lump-sum taxation is unavailable, and an Atkinson-type optimal income tax is used, it is shown that the opportunity to emigrate will create special difficulties for the LDC policy-maker.     

The political economy of sin taxes

We analyse the determination of taxes on harmful goods when consumers have self-control problems. We show that under reasonable assumptions, the socially optimal corrective tax exceeds the average distortion caused by self-control problems. Further, we analyse how individuals with self-control problems would vote on taxes on the consumption of harmful goods, and show that the equilibrium tax is typically below the socially optimal level. When the redistributive effects of sin taxes are taken into account, the difference between the social optimum and equilibrium is small at low levels of harm, but becomes more pronounced when consumption is more harmful.