Multi‐Factor Effective Corporate Taxation,Firms’ Mark‐Ups and Tax Incidence: Evidence from OECD Countries

This paper provides novel evidence on the multi‐factor effective marginal tax rates (EMTRs) for a sample of 17 OECD countries and 11 manufacturing sectors. We use a single framework encompassing capital, labour and energy taxes. Our cross‐country/cross‐sector approach allows us to analyse the contributions of these input factors to the effective tax borne by firms, taking explicitly into account their degree of substitution, their tax incidence and the role of mark‐ups. We find that the labour tax plays a particularly important role in the overall level of the EMTR and that the presence of mark‐ups can significantly alter the levels of the multi‐factor EMTR, although without significantly altering the ranking of countries. We also find that the bulk of the variation in EMTRs is across countries, rather than across sectors (within countries).     

信贷增长如何影响中国的收入和财富不平等

本文基于中国家庭追踪调查(CFPS)数据考察了信贷增长对中国家庭收入和财富不平等的影响。整体而言，信贷增长可以缩小家庭收入不平等，主要作用机制是信贷增长通过提高中低收入群体的劳动收入和单位时薪以缩小劳动收入不平等。同时，文献中所发现的信贷增长可能恶化收入不平等的机制——扩大家庭间非货币金融资产差距，在我国表现并不明显，原因在于中国家庭的非货币金融资产比例较低，这一点对于高收入家庭也不例外，且大部分家庭难以从金融资产交易中获利。信贷增长带来了各个收入组的房屋价值上涨，但高收入家庭房产价值上涨的幅度高于中低收入家庭，因此房价上涨扩大了不同收入家庭所持有的房产价值差异。考虑到家庭调查数据往往对高收入家庭的收入和财产覆盖不完整，上述结论可能低估了信贷增长对极少数高收入家庭收入和资产的影响。本文有助于更好地理解我国信贷增长对收入分配问题的影响，为相关政策制定提供了一定启示。     

Changes in Income Distributions and the Role of Tax‐Benefit Policy During the Great Recession: An International Perspective

In this paper, we examine the impact of the economic crisis and the policy reaction on inequality and relative poverty in four European countries: France, Germany, Ireland and the UK. The period examined, 2008–13, was one of great economic turmoil, yet it is unclear whether changes in inequality and poverty rates over this time period were mainly driven by changes in market income distributions or by tax‐benefit policy reforms. We disentangle these effects by producing counterfactual (‘no reform') scenarios using tax‐benefit microsimulation and representative household surveys for each country. For the first stage of the Great Recession, we find that the policy reaction contributed to stabilising or even decreasing inequality and relative poverty in the UK, France and, especially, Ireland. Market income changes nonetheless pushed up inequality and relative poverty in France. Relative poverty increased in Germany as a result of policy responses combined with market income changes. Subsequent policy reforms, in the later stage of the crisis, had markedly different cross‐country effects, decreasing overall poverty in France, increasing it in Ireland, and giving mixed effects for different subgroups in Germany and the UK.     

Capital Regulation with Two Banking Sectors: Cyclicality and Implementation

We present a capital regulation policy in a model in which banks can choose to be unregulated, by operating in the shadow banking sector, when the cost of being regulated (restriction on portfolio risk) exceeds the benefit (cheaper funding/insurance). We show that the welfare maximizing capital requirement policy can be procyclical: lower requirement during booms and higher requirement during recessions. Our policy specifies the level of capital requirement as a function of the observed relative size of the unregulated and regulated banking sectors. This specification achieves the optimal aggregate risk exposure by obtaining the right mix of the two sectors.     

Abolishing the Tax‐Free Threshold in Australia: Simulating Alternative Reforms*

This paper examines the role of the tax‐free income tax threshold in a complex tax and transfer system consisting of a range of taxes and benefits, each with its own taper rates and thresholds. Considering a tax and benefit system with benefit taper rates whereby some benefits are received by income groups other than those at the bottom of the distribution, it is suggested that a tax‐free threshold is not a necessary requirement to achieve redistribution. Four alternative policy changes, each involving the elimination of the tax‐free threshold in Australia and designed to achieve approximate revenue neutrality, were examined using the Melbourne Institute Tax and Transfer Simulator. A range of implications were examined, including labour supply responses to tax changes and the effects of policy changes on inequality and social welfare. The results demonstrate that it is possible to eliminate the tax‐free threshold under approximate overall revenue and distribution neutrality, but that it is impossible to improve labour supply incentives at the same time. In order to achieve improved incentives, either revenue or distribution neutrality has to be sacrificed.     

Targeted Interventions in Healthcare: The Role of Facility Placement*

Adequate targeting is a primary concern in the design of any social programme that attempts to reach a specific group in society. This paper studies the targeting of a healthcare‐centre programme aimed at the poor that relies on household self‐selection into the programme at the local level. We find that a key variable in determining utilisation of the health centres is location. Households living near a centre are substantially more likely to use it than households living further away. This points to the importance of facility placement in targeting self‐selected health programmes to the poor.     

住房耐用品、土地市场分割与货币失踪之谜

2008年国际金融危机后,我国M2供给增幅远高于CPI上涨幅度,这一现象被学界称为“货币失踪之谜”。本文构建了一个两部门新凯恩斯货币模型来研究这一问题。当外部需求下降后,央行降低利率以提振经济,房地产部门和非房地产部门同时扩张。由于住房属于耐用消费品,具有一定的金融属性,其需求对利率变化更敏感。利率下降后,住房需求相对普通消费品需求上升更多。因为存在土地市场分割,商住用地供给弹性较小,住房需求上升导致商住用地价格上升较多,地价上涨提升了房地产企业的抵押融资能力,房地产部门进一步扩张。普通消费品需求对利率反应小,需求较弱导致工业用地价格上升幅度较小,非房地产部门抵押融资能力小幅提升。因此,非房地产部门产出和CPI只温和扩张。Ramsey最优货币政策模拟表明,只有实现了房地产部门与非房地产部门均衡发展,才能实现社会福利最大化。     

The futures of offshoring FDI in high-tech sectors

This paper examines what is still a relatively new phenomenon in the literature, the outsourcing/offshoring of high-technology manufacturing and services. This has become a concern for both policy makers and academics for two reasons. Firstly, policy makers have become concerned that the offshoring of high-technology sectors in the West will follow the more labour intensive sectors, and move to lower cost locations. Secondly, international business theory has tended to view low costs, and high levels of indigenous technological development as being the two main drivers of location advantage in the attraction of FDI. We show that this may not be the case for offshored high-technology manufacturing or services.     

Empirical Microeconomics in Changing Times: A Reflection on 50 Years of IFS Research

Since the publication of the Meade Report in 1978 and the establishment of the Fiscal Studies journal in 1979, IFS has been a world leader in the microeconomic analysis of tax policy. Here we document the growing importance of rigorous empirical analysis in our academic and policy research. We point to the expanding reach of IFS research outside the pure analysis of tax policy in the years following the Meade Report and the key role played by the ESRC Centre for the Microeconomic Analysis of Public Policy, established in 1991. This Centre provided the environment for long‐term research across a wide set of fields that has enabled IFS to stay ahead in the policy debate and maintain a leading position in academic research. The breadth and depth of work in tax policy as it impacted on individuals, on families, on the labour market, on firms, on innovation, on retirement, on capital markets and on government revenues are exemplified through the Mirrlees Review. The expansion of IFS research into a broader set of areas, including health, child development and human capital, is captured through the recent launch of the Deaton Review on the causes and consequences of inequality, covering a broad set of inequalities and the challenges they bring to society, to policy and to research.     

The Distributional Implications of Income Under‐Reporting in Hungary*

The ability and inclination of specific social groups to evade tax vary widely, and this leads to considerable variation in the actual tax burden on individuals with similar levels of income. Thus, ignoring tax evasion can be seriously misleading in terms of the distributive and fiscal effects of the tax system. This paper estimates the distributional implications of income tax evasion in Hungary, based on a random sample of the administrative tax records of nearly 230,000 individuals. Gross incomes declared in the administrative tax returns are compared with incomes stated in a nationally representative household budget survey. Our estimates show that the average rate of underreporting is 9–13 per cent, though this conceals a big difference between the self‐employed (who hide the greater part of their income) and employees. The estimates are likely to be lower bounds. These rates are used in a tax– benefit microsimulation model to calculate the fiscal and distributional implications of under‐reporting. Tax evasion reduces households' personal income tax payments by about 16–20 per cent. While the poverty rate increases only slightly, income inequality rises significantly, suggesting that high‐income households tend to evade tax proportionately more. Finally, we find that tax evasion largely reduces the progressivity of the tax system.     

How Taxes and Welfare Benefits Affect Work Incentives: A Life‐Cycle Perspective

Personal taxes and benefits affect the incentive to work over the life cycle by altering income–age profiles, insuring against adverse shocks and changing the returns to human capital. In this paper, we show how a life‐cycle perspective alters our impression of how the UK tax and benefit system affects women's work incentives. Given that actual longitudinal data conflate age effects, cohort effects and policy effects, and, in the UK, are not available covering the full life cycle, we use simulated data produced by a rich, dynamic structural model of female labour supply and human capital that incorporates family formation and fertility. We find that individuals experience considerable variability in work incentives across life that outweighs the variability across individuals. Changes in the presence of children and a partner, as well as the level of any partner's earnings, are key to explaining these patterns: work incentives vary dramatically depending on family composition and the earnings of any partner, especially for the lower‐skilled, and most women experience a number of different family types during the course of their lives.     

Work,Care and Gender during the COVID-19 Crisis*

We explore the effects of the COVID-19 crisis and the associated restrictions to economic activity on paid and unpaid work for men and women in the United Kingdom. Using data from the COVID-19 supplement of Understanding Society, we find evidence that labour market outcomes of men and women were roughly equally affected at the extensive margin, as measured by the incidence of job loss or furloughing. But, if anything, women suffered smaller losses at the intensive margin, experiencing slightly smaller changes in hours and earnings. Within the household, women provided on average a larger share of increased childcare needs, but in an important share of households fathers became the primary childcare providers. These distributional consequences of the pandemic may be important to understand its inequality legacy over the longer term.     

Can household mobility solve basic environmental problems?

The paper studies the role of household mobility for efficiency of decentralized environmental policy. Pollutants may travel across regional boundaries, and regions can influence their capital income from abroad as well as the rent outflow to nonresidents by means of their environmental policy. Different degrees of interregional household mobility are analyzed within this framework. While regional governments internalize all externalities in their own self-interest in the case of perfect household mobility, only a region that voluntarily makes an interregional transfer to the other region has incentives to internalize interregional externalities if households are imperfectly mobile.     

The Effective Tax Burden of Companies and of Highly Skilled Manpower: Tax Policy Strategies in a Globalised Economy*

Company taxes and taxes on highly skilled labour both influence the attractiveness of a particular region as a location for investment. We measure the effective tax burden on capital investment and on highly qualified labour in 33 locations across Europe and the United States. We then correlate both types of tax burden in order to study the different tax policy strategies applied in different countries. We find that effective tax rates on companies and on highly skilled employees are closely correlated for a number of countries. Ireland and most new EU Member States impose relatively lower taxes on capital investment than on highly skilled manpower. Conversely, in the US, companies are taxed heavily but the effective tax rate on highly skilled employees is moderate.     

Indirect tax reform and the role of exemptions

This paper examines the question of whether indirect tax rates should be uniform, using four different modelling strategies. First, marginal tax reform is examined. This is concerned with the optimal direction of small changes in effective indirect tax rates and requires considerably less information than the calculation of optimal rates. Second, the welfare effects of a partial shift from the current indirect tax system in Australia towards a goods and services tax (GST) are considered, with particular emphasis on differences between household types and the role of exemptions. Third, in view of the stress on a distributional role for exemptions of certain goods from a GST, the potential limits to such redistribution are considered. The fourth approach examines the extent of horizontal inequity and reranking that can arise when there are non‐uniform tax rates. These inequities arise essentially because of preference heterogeneity.     

Digital currencies in financial networks

We introduce a central bank digital currency (CBDC) in the network of financial accounts. Simulating a shift of deposits by both households and non-financial corporations from the banking sector to the central bank, we model the different responses of the affected institutional sectors. We find that the introduction of CBDC generates funding shortages in banks, which may propagate to other sectors. In addition, significant adjustments in the balance sheets of all sectors trigger large moves in securities prices and induce changes in the financial network structure. Finally, we extend the analysis to the introduction of a crypto financial asset (stablecoin) issued by either a domestic or a foreign entity.     

The effect of personal bankruptcy exemptions on investment in home equity

Homestead exemptions to personal bankruptcy allow households to retain their home equity up to a limit determined at the state level. Households that may experience bankruptcy thus have an incentive to bias their portfolios toward home equity. Using US household data for the period 1996–2006, we find that household demand for real estate is relatively high if the marginal investment in home equity is covered by the exemption. The home equity bias is more pronounced for younger and less healthy households that face more financial uncertainty and therefore have a higher ex ante probability of bankruptcy. These results suggest that homestead exemptions have an important bearing on the portfolio allocations of US households and the extent to which they insure against bad shocks.     

货币政策、消费品和投资品通货膨胀——基于金融加速器视角

本文建立一个包含消费品和投资品生产的两部门新凯恩斯DSGE模型,并且引入金融加速器以分析货币政策对消费品和投资品通货膨胀的影响机制,同时使用1999Q1至2015Q4的中国宏观经济数据对模型进行贝叶斯估计。估计结果表明,两个部门的菲利普斯曲线都具有较高的价格粘性。外部融资溢价对两个部门企业投资的影响存在异质性,投资品部门的金融加速器效应更加明显。脉冲响应分析表明货币政策扩张时,投资品部门的产出和通胀膨胀上升幅度比消费品部门更大。理论模型的脉冲响应与VAR实证分析得到的经验事实相一致。金融摩擦导致的消费品和投资品部门需求结构的异质性是解释货币政策对两个部门影响差异的关键。数值模拟分析发现金融加速器机制主要改变货币政策对投资品产出和通货膨胀的影响,对消费品部门影响改变较小。方差分解结果表明加总技术冲击、投资边际效率冲击和货币政策冲击是经济波动的主要来源。     

Banking Products: You <Emphasis Type="Italic">Can</Emphasis> Take Them with You,So Why Don’t You?

Policymakers around the world call for more competition in the banking sector. One prerequisite to achieving this is customer mobility. Despite its policy relevance, surprisingly little is known about consumers’ bank switching behaviour. We show that the principal reasons to stay at one’s bank are a good bank-customer relationship, practical barriers, and the perception that there is not much benefit in switching. Moreover, we find that the reported propensity to switch varies across banking products. For the main current and savings accounts, this propensity is most strongly related to the bank-customer relationship, while for mortgage loans it is especially linked to switching experience. These findings have important implications for antitrust policy; they provide an argument against using a cluster-based legal standard for the analysis of competition and in favour of a disaggregated approach. Regarding the effectiveness of hypothetical policy initiatives to lower switching barriers, we find that the reported switching propensity with current accounts is higher in the case of account number portability, while more knowledge of the existing switching service has no significant effect. Lastly, scenario analysis shows that a policy of allowing new foreign banks to enter the savings market is less promising for enhancing mobility than a policy that increases the number of domestic players.     

Decomposing Inequality Changes: Allowing for Leisure in the Evaluation of Tax and Transfer Policy Effects

In this paper, we present two alternative methods of accounting for changes in leisure time in decomposing the inequality effects of tax and transfer policy changes. Three components are identified: tax policy, labour supply responses to tax policy changes and other population effects. The methods are used to decompose inequality changes in Australia between 2001 and 2006. Inequality is first defined in non‐welfarist terms as a function of disposable income: the independent judge places no value on leisure. Then, this is modified to allow for evaluations using a weighted geometric mean of disposable income and leisure. This is seen to modify the evaluation of changes in important ways. The results are found to differ from those obtained using a ‘welfarist’ evaluation in terms of money metric utility, where separate labour supply effects cannot be isolated.