EFFECTS OF TAXES AND BENEFITS ON INCOME DISTRIBUTION IN KOREA

This paper examines the redistributive effects of Korea's fiscal policies, including consumption taxes and in‐kind benefits. Using the Household Income and Expenditure Survey of 2007, we find that taxes and transfers reduce income inequality in Korea by 13.8 percent. Contrary to the popular belief that direct taxes are the key tool for redistribution, in‐kind benefits, direct taxes, and social security contributions all decrease the Gini coefficient by 6.7, 4.7, and 2.9 percentage points, respectively. The redistributive effect of consumption taxes is small and negative (?0.5 percentage point). Policy simulations indicate that education spending financed by the personal income tax has a positive redistributive effect and that the lower 70 percent of households enjoy positive net benefits. Spending targeting the poor has a strong redistributive effect, which implies low popularity because the majority of households face net losses.     

THE BUILT-IN FLEXIBILITY OF INCOME AND CONSUMPTION TAXES IN NEW ZEALAND

This paper provides estimates of individual and aggregate revenue elasticities of income and consumption taxes in New Zealand, based on the 2001 tax structure and expenditure patterns. Using analytical expressions for revenue elasticities at the individual and aggregate levels, together with a simulated income distribution, values for New Zealand were obtained. Results using equi-proportional income changes suggest that the aggregate income and consumption tax revenue elasticities are both fairly constant as mean income increases, at around 1.3 and 0.95 respectively. This latter estimate assumes that increases in disposable income are accompanied by approximately proportional increases in total expenditure. If there is a tendency for the savings proportion to increase as disposable income increases, a somewhat lower total consumption tax revenue elasticity, of around 0.9, is obtained for 2001 income levels. However, non-equiproportional income changes are more realistic. Allowing for regression towards the geometric mean income reduces these elasticities, giving an elasticity for income and consumption taxes combined that is only slightly above unity. Examination of the tax-share weighted expenditure elasticities for various goods also revealed that, despite the adoption of a broad based GST at a uniform rate in New Zealand, the persistence of various excises has an important effect on the overall consumption tax revenue elasticity, especially for individuals at relatively low income levels.     

TAXES AND INCOME: A MICROUNIT ANALYSIS

The paper details the methodology used and the results obtained in a recently completed study of the total U.S. tax burden based on microdata survey files. The method of constructing the data base—the 1966 MERGE file—is discussed, and the needed imputations and adjustments to income and taxes to bring the file totals up to national income aggregates are described. An explanation is included of adjusted family income, a unique income concept used in the study to measure and compare tax burdens.
The study involved the evaluation of errective tax burdens under eight different assumptions regarding the incidence of the various major taxes. Those assumptions are detailed and the results of the study are presented. The essential conclusion of the study is that the overall impact of the tax system is virtually proportional for 90 percent of the families in the United States regardless of the incidence assumptions used. However, substantial differences in tax burdens were found among various subgroups of the population.     

STUDYING INEQUALITY IN INCOME DISTRIBUTION OF SINGLE-PERSON HOUSEHOLDS IN FOUR DEVELOPED COUNTRIES

The increasing frequency of single-person households has become a major economic phenomenon, and is likely to become an important political force. This paper focuses on differences related to inequality of income distribution among single-person households in Europe's four largest economies, i.e. France, Germany, Italy and the U.K. Income distribution was modeled in terms of individual characteristics using a parametric model with heterogeneous model parameters. Poverty differences were also broken down using the results of Biewen and Jenkins (2005 ) in order to understand the relationship between poverty and individual characteristics among countries.     

THE DISTRIBUTION OF PUBLIC EXPENDITURES AND TAXES AMONG HOUSEHOLDS IN THE UNITED KINGDOM*

This paper presents an analysis of the distributive impact of public expenditures and taxes in the United Kingdom. The analysis uses household level microdata from the 1971 Family Expenditure Survey, with tax and expenditure aggregates drawn from the national accounts. The analysis is the first to allocate all taxes and public expenditures for the United Kingdom, and the results are compared to those from the more restricted analyses carried out by the U.K. Central Statistical Office. Results are presented for individual taxes and benefits as well as for overall net benefits and they describe distributional effects with respect to income class, household size, number of earners and housing tenure. A final section of the paper compares the results to those from a similar analysis for the United States which were reported in the previous issue of this review.     

TAXES,INCOME, AND RETIREMENT SAVINGS: DIFFERENCES BY PERMANENT AND TRANSITORY INCOME

This article examines the determinants of and benefits from saving for retirement in tax‐preferred accounts by permanent and transitory income levels. We find that higher incomes (both permanent and transitory) are associated with a greater probability to contribute and larger contributions. We also find that tax benefits for retirement savings increase strongly with income, although the increase is slightly smaller when taxpayers are ranked by their permanent (rather than current) income. In addition, we find that a large portion of the benefits from the Saver's Credit go to taxpayers who would not be eligible based on their permanent income. Finally, we find that recent tax changes (including the introduction of the Saver's Credit) significantly increased contributions among low‐income households, although the effect was centered among those with only transitorily low income. (JEL H24, H31, E21)     

UNCERTAIN INCOME,UNCERTAIN TAXES AND RICARDIAN EQUIVALENCE*

L. K. C. Chan (1983) and R. B. Barsky et al. (1986) have demonstrated that a tax cut financed by bonds to be repaid from proportional income taxes on uncertain future income, by reducing the latter's riskiness, stimulates current consumption - Ricardian equivalence does not hold. However, their two-period models exclude the possibility that future taxes are uncertain. In this paper a three-period model is developed that, by allowing the government two periods in which to collect taxes, introduces ex ante tax rate uncertainty. This renders the result concerning Ricardian equivalence ambiguous. By comparison, taxes levied as lump sums and via a ‘lottery’ respectively produce the ‘usual’ effects (zero and negative) on consumption.     

中国城市居民的家庭收入、消费和储蓄行为:一个基于组群的实证研究

近年来,中国的高储蓄率越来越引起关注。本文利用中国城镇居民住户调查数据对城市家庭的收入、消费以及储蓄率进行基于组群分析的实证研究。实证结果表明,中国城市家庭的储蓄行为具有独特性,家庭储蓄率不断提高。本文从两个方面对此做出解释:其一,各个组群的家庭消费增长慢于收入增长;其二,年轻组群的高储蓄倾向及其在样本中随时间的比重不断提高。此外,本文也分析了养老金收入对于年老组群家庭收入和储蓄的影响。     

STATE INCOME TAXES AND MILITARY SERVICE MEMBERS' LEGAL RESIDENCY CHOICES

Using military residency data from 1998 to 2005 across all 50 states, I find that income taxes deter legal residencies and that the effect grows as income increases. My results indicate that states with no income tax or with exemptions for military wages experience 100% and 39% more service member residencies, respectively, than states with an income tax. The influence of state tax policy increases with higher pay and tenure. My findings are in keeping with economic theory, which suggests that high income workers will migrate out of high tax areas and be replaced by low income workers. (JEL H24, H71, J61)     

THE ESTIMATION OF POVERTY DYNAMICS USING DIFFERENT MEASUREMENTS OF HOUSEHOLD INCOME

If surveys offer two different measurements of household income, one can use them simultaneously to identify the potential effects of measurement error on the observed-income mobility of the poor. In this paper we investigate transition tables between subsequent income states. Latent Markov models are used to model incorrect classifications of income states. Misclassifications are interpreted as measurement error or spurious changes that are not consistent with a simple transition table model. The empirical results for the German Socio-Economic Panel (GSOEP) show that the observed transition tables overestimate the mobility between poverty states.     

INCOME TAXES AND THE COMPOSITION OF PAY: EVIDENCE FROM THE BRITISH HOUSEHOLD PANEL SURVEY

According to the standard principal‐agent model, the optimal composition of pay should balance the provision of incentives with the individual demand for insurance. Do income taxes alter this balance? We show that the relative share of Performance‐related pay (PRP), on total pay is reduced by higher average and marginal income taxes. Empirical evidence based on the British Household Panel Survey is consistent with the theoretical predictions of the tax–augmented principal‐agent model. Our estimates suggest that a 10% reduction in the marginal income tax rate, holding the average tax rate constant, increases the share of PRP in total pay by 2.25–3.02%, depending on the empirical specification. Similarly, a 10% reduction in the average income tax rate, holding the marginal tax rate constant, increases the share of PRP in total pay by 5.10–5.27%.     

HOW CERTAIN ARE DUTCH HOUSEHOLDS ABOUT FUTURE INCOME? AN EMPIRICAL ANALYSIS

The precautionary saving literature shows that income uncertainty increases savings and wealth. To estimate the magnitude of this effect, we need a measure of income uncertainty. This paper empirically analyzes subjective income uncertainty in The Netherlands. Data come from a large Dutch household survey. We measure income uncertainty by asking questions on expected household income in the next twelve months. First, we describe the data and investigate the relationship between the measure of income uncertainty and a number of household characteristics. Controlling for information on expected income changes, we find strong relationships between labor-market characteristics and the subjective income uncertainty as reported by the heads of the households. Second, we compare income uncertainty in The Netherlands with income uncertainty in the U.S. and Italy. It becomes evident that perceived income uncertainty is smaller in The Netherlands than it is in the U.S.     

TYPES OF INCOME AND INEQUALITY IN CHINA AT THE END OF THE 1980s

Using a nationwide household income survey, different types of income in the People's Republic of China at the end of the 1980s is analysed. The results show that various income types play quite different roles in rural and urban areas. Subsistence income makes up about half of the total income in rural China. Money income makes up about two-thirds of total income in urban China and is the major contributor to inequality in the entire country. In kind income, of which highly subsidized housing is the single most important category, is highly concentrated in urban areas and contributes greatly to inequality.     

我国不同形式转移支付财力 均等化效应研究

本文通过基尼系数分解的方法考察了我国转移支付的地区间财力均等化效应。计算结果显示,一般性转移支付和专项转移支付在资金分配上均向财力较弱的地区进行了倾斜,具有财力均等化效应,在强度上,一般较专项要强。在构成一般性转移支付的诸多子项目中,农村税费改革转移支付向财力较弱地区的倾斜程度最强,教育转移支付次之,紧随其后的分别是基本财力保障机制奖励补助以及调整工资转移支付。但是由于均衡性转移支付规模较大,财力均等化效应最强。     

经济转型下的中国城镇女性就业、收入及其对家庭收入不平等的影响

本文利用1988、1995和2002年的中国城镇家庭收入调查数据,旨在比较改革的渐进期(1988—1995年)和深化期(1995—2002年),城镇已婚女性的就业和就业收入对家庭收入差距的影响。我们发现在两个时期,已婚女性的就业明显下降,其就业收入都起到了缩小家庭收入差距的作用。在改革渐进期,已婚女性就业收入缩小家庭收入差距的作用不断加强;而在改革深化期这一作用是下降的。和改革渐进期相比,已婚女性就业收入的变化在改革深化期成为了缩小家庭收入差距的重要原因。     

REAL INCOME CHANGES O F HOUSEHOLDS IN THE NETHERLANDS, 1977–1983

This paper deals with the construction of statistics on real income changes of households in the Netherlands. Two different figures are computed, called the dynamic and the static figure. The dynamic figure reflects the change in real income as experienced by individuals. It is based on longitudinal data: two panels resulting from an exact match between three files from the Netherlands' IRS. The static figure reflects the change in real income of positions (e.g. of a 60-year old civil servant) instead of individuals. It is based on micro-simulation: changes in wages, taxes, etc. are simulated on a sample of individuals for whom socio-economic and demographic positions are assumed constant.
In the paper we discuss both figures and some other problems, e.g. the concept of real income and the price index. Furthermore we give results for the years 1977–1983 and discuss some differences between the dynamic and the static figure. The most notable result is the large variation in the dynamic figure, exhibiting a very substantial income mobility.