A general equilibrium model of heterogeneous local property taxes

A formal model of an economy consisting of many production centres, each of which levies property taxes at a different rate, is developed and analyzed. In the context of the model, it is shown that holders of capital may have either a positive or negative willingness to pay for a heterogenous system of taxes relative to a uniform tax which raises the same revenue. Particular emphasis is placed on interpretation of the ‘new view’ of the property tax in light of this and other results which derive from the model.     

Unit versus ad valorem taxes: Monopoly in general equilibrium

We show that if a monopoly sector is imbedded in a general equilibrium framework and profits are taxed at one hundred percent, then unit (specific) taxation and ad valorem taxation are equivalent on the set of Pareto optima.     

Possibilities for the exportation of production taxes: A general equilibrium analysis

This paper re-evaluates previous discussions of inter-regional tax incidence and tax exportation. A two region general equilibrium model is developed that allows for inter-regional capital mobility and explicit commodity price determination, where one of the two regions is incompletely specialized. Conditions are determined under which either region will be able to export a production tax. Also, the link between tax exportation and the welfare of the taxing region is analyzed. In the case where taxes are not equal to zero initially, tax exportation may be inadvisable even when it is possible.     

A general equilibrium analysis of property tax incidence

Mieszkowski's (1972) analysis of the ‘new view’ of property tax incidence dealt with a model of an economy containing only one sector and three factors, in which labor was immobile. Brueckner (1981) incorporated an equal utility condition into his general equilibrium analysis of property tax incidence to take worker mobility into account. His model, however, did not have capital as an input factor and the benefits of public expenditure were ignored. This paper extends previous research by using a general equilibrium model of an economy with two sectors, three factors, and multiple communities. Both capital and labor are assumed to be mobile and Brueckner's labor mobility condition is modified to include public expenditure effects. While the results of the analysis support the ‘new view’, they qualify the original Mieszkowski studies in many aspects. The model also sheds light on tax incidence in no-tax communities, which was often ignored in earlier studies.     

The incidence of heterogeneous residential property taxes

In an economy with multiple tax jurisdictions, the distribution of the burden of heterogeneous residential property taxes is shown to depend on the elasticity of demand for housing, the elasticity of substitution between land and capital in housing production, the elasticity of supply of land to individual tax jurisdictions, and the degree of population mobility between tax jurisdictions. It is demonstrated that the excise effects of the residential property tax may not cancel across jurisdictions and the average rate of tax may overstate or understate the burden on residential capital.     

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.     

The incidence of taxes: A dynamic macroeconomic analysis

This paper analyzes the incidence of various tax changes using the intertemporal optimizing framework developed by Brock and Turnovsky. The model contains a reasonably complete specification of the corporate sector, in which firms have the choice of financial structure. It also allows for a range of government financial policies, although only one is considered in detail. Both the short-run and the long-run effects of changes in the personal income, capital gains, and corporate profit tax rates are analyzed. It is shown that the effects of tax changes (a) vary between the short and long run; (b) the effects of tax changes depend critically upon the financial structure adopted by forms; and (c) may also depend upon government financial policy.     

简化一般均衡模型中一般均衡点的确定

经济学教材在讨论一般均衡的时候,往往以两个人、两种生产要素、两种产品这种最简单的社会作为研究对象,它们通常只阐述了一般均衡的存在,但都没有说明这种最简单的社会一般均衡点的确定即以此作为研究对象。     

Uncertainty over future environmental taxes

Besides static efficiency properties, environmental policies should be evaluated in terms of their longer-run impacts on investment and technological change to reduce pollution and degradation of natural resources. Using a stochastic dynamic programming approach, this paper analyzes how uncertainty about a future environmental tax on a polluting input alters investment in resource conservation and how such investment affects future demand for the polluting input. The impact on investment depends crucially on price elasticities of demand and on the manner in which investment shifts and rotates the demand schedule for the polluting input in the future. The expectation of a higher tax does not necessarily create stronger incentives for investment in resource conservation. More uncertainty about future policies does encourage investment if it makes a firm more responsive to future price changes and discourages investment if it makes a firm less responsive to price changes.     

The incidence of income taxes on high earners in Canada

This article explores the “brain drain” explanation for the concentration of incomes in Canada during the past 30 years, namely, that high-skilled Canadians make use of high salaries on offer in the United States to extract higher salaries at home. If this is the case, then for a given level of US salaries, the threat to accept outside offers should be more credible when the Canadian dollar is depreciating against the US dollar, and weaker when the Canadian dollar is appreciating. The data are broadly consistent with this claim: income concentration worsened during the depreciations of the 1980s and 1990s, and eased when the Canadian dollar began to appreciate in value. The article develops a simple two-parameter model based on the propositions that high earners in Canada can use US salaries to bargain for higher salaries, and that Canadian high earners can shelter part of their income from personal income taxes. It also offers some preliminary evidence about the parameter values consistent with available data. The results suggest that higher top marginal personal income tax rates may potentially accentuate top-end after-tax income inequality. If high earners are able to use their bargaining power to extract pay increases to offset higher tax rates, then the burden of increased personal income taxes will be deflected elsewhere, and may even have the perverse effect of making the after-tax income distribution more unequal than it was before.     

Health effects and optimal environmental taxes

The literature on environmental taxation in the presence of pre-existing distortionary taxes has shown that interactions with these distortions tend to raise the cost of an environmental tax, and thus that the optimal environmental tax is less than marginal environmental damages. A recent paper by Schwartz and Repetto (2000) challenges this finding, arguing that the health benefits from reduced pollution will also interact with pre-existing taxes, and may cause the optimal environmental tax to exceed marginal damages.Schwartz and Repetto’s analysis represented health effects implicitly in the utility function. In contrast, the present paper explicitly represents health effects in an analytically tractable general equilibrium model. This model shows that interactions with health effects from pollution actually will tend to reduce the optimal environmental tax, contradicting, Schwartz and Repetto’s conclusion. This demonstrates the usefulness of explicitly modeling health effects, and it reinforces the general notion that tax-interactions tend to raise the costs of an environmental tax.     

A general equilibrium model of the incidence of corporation income tax under uncertainty

In this paper we investigate the incidence of the corporation income tax in terms of a two-sector, general equilibrium model, where production decisions are made under uncertainty. The conventional result, derived originally by Harberger (1962), is that if the corporate sector is the capital-intensive sector, then capital must bear a greater burden of the tax, in proportion to its initial share in national income, than labor. This result continues to hold unambiguously under uncertainty only if the relative and the absolute risk aversion of the corporations are non- increasing in profits. Otherwise, the Harberger result may not hold.     

The share economy in general equilibrium

Weitzman's 1982 paper on increasing returns and unemployment equilibrium is driven by the presence of a Clower constraint and does not provide a persuasive model of unemployment. The employment effects of implementation of a share economy are impossible to evaluate until unemployment equilibrium is understood. Further, the determination and adjustment of the share parameter and of labor demand are unsatisfactory in Weitzman's model.     

On a general equilibrium model of the incidence of the corporation tax under uncertainty

This paper addresses two issues. First, we demonstrate that when there is uncertainty in a general equilibrium model of a large country the usual rule for the auctioneer, that of searching for a set of relative prices at which excess demand in each market is zero, is no longer appropriate. It is suggested that the setting of expected demand to expected supply in each market would be a convenient generalization. Secondly, results on the incidence of the corporation income tax when there is uncertainty in the corporate sector, and alternatively when there is uncertainty in the noncorporate sector, are presented.     

Differential incidence in the presence of initial distorting taxes

This paper extends the two-sector, two-factor, general-equilibrium analysis of differential tax incidence by considering an initial situation where the government finances a fixed commodity bundle by distorting commodity and factor taxes. This alters the traditional analysis of marginal differential incidence in a fundamental way by necessitating the simultaneous determination of the change in the rental-wage ratio, the change in aggregate welfare and the change in an endogenously adjusting tax parameter. This contributes towards an integration of the study of the excess-burden effects and the distributional effects of a given tax situation.