Economic theorist and ‘entrepreneur of popularisation’: Schumpeter as Finance Minister and journalist

Abstract

Modern theory of popularisation suggests that the production and the popularisation of scientific knowledge are interlinked and interactive processes. This perspective offers new insights into Joseph A. Schumpeter's main work in public finance, The Crisis of the Tax State, and into his later endeavours as Finance Minister and journalist to popularise two central economic ideas of this work, the once-and-for-all capital levy and the reform of the tax system. We demonstrate that Schumpeter's Crisis contains popularising features and was written with a popularising intention. Furthermore, we show that in his journalistic works popularisation went hand in hand with the development of innovative economic ideas.     

Capitalism and democracy in the 21st century: a Kaleckian interpretation of a Schumpeterian problem

The paper reinterprets Schumpeter's views on the dynamic effects of taxation, as originally expressed in Crisis of the Tax State, from a Kaleckian perspective. In light of Schumpeter's rejection of Keynesian and Marshallian approaches to taxation, the paper argues that a recently developed Kaleckian approach provides an appropriate basis from which to analyse the effects on the business cycle of balanced changes in the structure of taxation. It is shown that, under certain shifting assumptions, increases in the taxation of wages or profits will stimulate investment and attenuate the amplitude of the business cycle. Ultimately, the shifting of taxes reduces to a conflict over income shares. The changing distribution of income in the United Kingdom in recent years suggests that investment is likely to remain sluggish unless there is a significant reversal of income shares. This may give rise to increasing economic and political tensions into the 21st century.     

Institutionalism and Fiscal Policy at Midcentury

This article analyzes the career and contributions of Roy Blough (1901–2000) as a case study of Wisconsin institutionalism in government policy-making at midcentury. As a faculty member at Cincinnati, Chicago and Columbia, editor of the National Tax Journal, director of the research division of the U.S. Treasury and member of the Council of Economic Advisors, Blough played a significant role in the development of fiscal policy. The article also considers Blough’s contributions to tax policy and his views on Keynesian public finance. It further identifies the contributions of Wisconsin institutionalism to modern fiscal policy.     

Joseph A. Schumpeter’s contributions in the area of fiscal sociology: a first approximation

Fiscal sociology deals with the ramifications of the fiscal activities of the state into areas which are not their primary target. These effects may occur in sectors not directly affected such as related markets, but they may also occur outside the economic sphere proper, such as in politics, culture, religion, or society at large. Schumpeter contributed to the research project of fiscal sociology throughout his life. In this first approximation, his contribution is discussed in terms of his appreciation of three important scholars who all made landmark contributions to fiscal sociology: Franz Oppenheimer, Werner Sombart, and Gustav (von) Schmoller.JEL Classification: B15, H39     

Are Tax Expenditures of Individuals Only a Tool of Tax Optimisation?

The paper focuses on tax expenditures of individuals, which are one of the fiscal tools of the state. In the Czech Republic they are primarily aimed at housing policy, pension policy, and philanthropy, and the question is the extent to which tax expenditures can influence the preferences of tax payers. The aim of this paper is to evaluate the effect of tax expenditures of individuals in the form of tax deductions for social policy, housing support and retirement savings. We also evaluate whether these tax deductions fulfill the fiscal functions for which they were introduced and the extent to which taxpayers use them. Methodically, the research is based on the analysis of secondary statistical data of the Financial Administration of the Czech Republic and results from aggregated tax returns filed for the period 2005–2015. The effect of tax deductions was decreased by abolition of the progressive rate of personal income taxes and by introduction of a uniform tax rate of 15%. Tax deductions for retirement savings do not have a sufficiently strong motivational impact and do not affect taxpayers in the context of public policy. Deductions for mortgage interest can be regarded as a form of major housing support, but are related to taxpayer income and favor those with higher incomes.     

A model of the Italian cut-off system for taxing small businesses

The Studi di Settore are used by the Italian tax administration to calculate reference revenue levels for small businesses and provide a kind of cut-off level for tax audits. Recently new rules have been introduced in order to render the Studi di Settore more efficient in producing realistic estimates, with the aim of reducing the “legalized evasion” that might arise in case of a systematic downward bias. Voices of the involved categories, however, convinced the Government to partially step back. Building upon the standard firm’s tax evasion model of Cowell [Cowell, F.A., 2004. Carrots and sticks in enforcement. In: Aaron, H.J., Slemrod, J. (Eds.), The Crisis in Tax Administration. The Brookings Institution, Washington DC, pp. 230–275] and the approach of Santoro [Santoro, A.C., 2006. Evasione delle società di capitali: evidenze empiriche e proposte di policy. In: Brosio, G., Muraro, M. (Eds.), Il Finanziamento del Settore Pubblico. SIEP, Angeli, Milano, pp. 163–186] we show that, under given conditions, a stringency increase might backfire implying a larger overall tax evasion and a smaller tax revenue.     

Strategic Tax Competition in Switzerland: Evidence from a Panel of the Swiss Cantons

Abstract. Tax competition is discussed as a source of inefficiency in international taxation and in fiscal federalism. Two preconditions for the existence of such effects of tax competition are that mobile factors locate or reside in jurisdictions with – ceteris paribus – lower tax rates, and that taxes are actually set strategically in order to attract mobile production factors. It is well known from studies about Swiss cantonal and local income tax competition that Swiss taxpayers reside where income taxes are low. In this paper, empirical results on strategic tax setting by cantonal governments are presented for a panel of the Swiss cantons from 1984 to 1999. Completing the evidence on Swiss tax competition, income tax rates in cantons are the lower, the lower the tax rates of their neighbors.     

Metatheory as the key to understanding: Schumpeter after Shionoya

In his recent book, Yuichi Shionoya departs from previous Schumpeterianstudies. He sets out to reconstruct Schumpeter's metatheoreticalframework, which he argues is the key to a correct interpretationof his substantive writings. The centrepiece of this projectis the thesis that Schumpeter has a coherent methodologicalposition—instrumentalism—which consistently underpinshis theoretical work. The present paper examines this thesis,and in so doing paves the way for an alternative hypothesison Schumpeter. This hypothesis is based on Tony Lawson's workon the philosophy of economics.     

基于灰色残差模型的中国税收收入预测

税收是国家财政收入的重要来源,准确的税收预测结果对于制定各项经济政策具有非常重要的意义。为提高中国税收收入的预测精度,适应资源配置、收入再分配和宏观经济调控的需求,在传统灰色预测技术的基础上,建立了残差灰色预测模型,并通过实例分析验证了该模型的实用性和精确性。     

Where Schumpeter was nearly right – the Swedish model and Capitalism, Socialism and Democracy<--RID="*"-->

In Capitalism, Socialism and Democracy Joseph A. Schumpeter concluded that socialism would eventually displace capitalism in Western democracies. This would come about as a result of the superior performance of capitalism. We extract six “stylized” propositions that are essential elements of Schumpeter's prediction about the fate of capitalism. These propositions are confronted with the development of the Swedish economy. The three main results of the analysis are: (1) The evolution of the Swedish economy closely followed Schumpeter's predictions until about 1980: Large firms became increasingly predominant in production and innovative activity, ownership of firms became more and more concentrated, individual entrepreneurship waned in importance, the general public grew increasingly hostile towards capitalism, and by the late 1970s explicit proposals for a gradual transfer of ownership of firms from private hands were launched. (2) Design of tax and industrial policies fueled a development of the economy along the lines predicted by Schumpeter. In general, the policies discouraged private wealth accumulation. In particular, the policies favored concentration of firms and concentration of private ownership. (3) The turning point away from the path to socialism coincides with real world developments that disclosed two major flaws in Schumpeter's analysis. First, the ever more obvious failure of socialism in Eastern Europe went against Schumpeter's assertion that socialism can work. Second, Schumpeter, who thought that modern technology would make the giant corporation increasingly predominant, did not foresee the revival of entrepreneurship that took place in the Western countries around 1980.     

Puerto Rico in the 1970s and 1980s: Crisis of the Development Model

In his institutional economic essay on "Taxation in Chicago and Philadelphia" (published in 1895) John R. Commons addresses property tax assessment. He demonstrates that the revenue is not just a question of the tax rate and the distribution of the tax burden but also one of constitutional requirements and how the taxes are assessed. His essay is reviewed with regard to his later work, subsequent Institutional Economics, and the social provisioning of the market for professional tax advice. The degree of liabilities is defining characteristics of the differences between the United States and Germany.     

基于贝叶斯分类器的纳税评估模型研究

纳税评估是集纳税服务和纳税管理于一体的税收管理方式。评估模型是纳税评估工作的关键所在。在总结纳税评估基本原理的基础上,针对企业的综合纳税评估问题提出了评估分析指标体系,构建了基于贝叶斯分类模型的纳税评估方法,并结合现实数据做了实证分析。实证结果显示,贝叶斯分类纳税评估模型具有很高的现实应用价值。     

From “tax state” to “debt state”

The paper is motivated by Joseph A. Schumpeter's The Crisis of the Tax State. It inquires whether the buildup of government debt in peacetimeprosperity is a threat to the stability, existence or creation of viable tax states. The paper begins by setting out Schumpeter's conception of the tax state and the nature of recent political-economic events which have reinvigorated the concept. Next the paper sets out some simple debt dynamics and sketches a debt-induced business cycle arising from heavy reliance on debt finance in peacetimeprosperity. Finally, the paper assesses threats to the tax state in light of recent work on path dependence and positive feedback. An attempt is made to throw some light on whether the plethora of new, and often small, states spawned by the demise of communism can be viable tax states.Essay on Government, the Tax State and Economic Dynamics submitted to the Third Schumpeter Prize Competition.     

Macroeconomic Policy and Ownership Structure in a Mixed Transition Economy

Both state and non-state sectors have important roles in the Chinese economy. A dynamic model to analyze capital accumulation in state and non-state sectors is constructed and the fiscal and monetary policy requirements for the coexistence of a state sector and a non-state sector are derived. Our findings suggest that the effects of fiscal and monetary policies on ownership structure depend on which government subsidization policy is implemented. The results indicate that lowering tax rates and tightening the money supply can speed up the transition pace, but these policies do not necessarily contribute to developing an economy with a greater share for the non-state sector.J. Comp. Econom., December 2000, 28(4), pp. 762–785. College of Economics, Osaka Prefecture University, 1-1, Gakuen-Cho, Sakai, Osaka 599-8531, Japan.     

Fiscal harmonization in the European Union with public inputs

Fiscal harmonization among the European Union member states is a goal involving major difficulties for its implementation. Each country faces a particular trade-off between fiscal revenues generated by taxation and the productive efficiency loss induced by their respective tax code. This paper provides a quantitative analysis of these trade-offs for a number of the European Union (EU-15) member states using a dynamic general equilibrium model with public inputs. Calibration of the model for the EU-15 member states provides the following results: i) the maximum tax revenue level is relatively far from the current tax levels for most countries; ii) the cases of Sweden, Denmark and Finland are anomalous, as productive efficiency can be gained by lowering tax rates without affecting fiscal revenues; iii) in general, countries would obtain efficiency gains without changing fiscal revenues by reducing the capital tax and increasing the labor tax; and iv) capital tax harmonization to the average capital tax rate can be done with quite small changes in both fiscal revenues and output for most countries.     

Capitalism and democracy at a crossroads: the civilizational dimension

This paper evaluates Schumpeter's grand vision as reflected in his Capitalism, Socialism and Democracy, and elaborates it in conjunction with the so-called “globalization” trends characteristic of the wake of the twenty-first century. In addition to the evolutionary nature of his methodology, the institutionalist dimension of Schumpeter's definitions are brought to light. A case is made for a fundamental process of “uncreative destruction” as far as the institutional setup of the economy is concerned. The contention of this paper is that there is ample support in Schumpeterian analysis for a counterpoint to the liberal thesis that envisages the worldwide spread of individualism, market economies, and democratic forms of government.     

Fiscal Incentive Effects of the Australian Equalisation System

Equalisation grants can affect a state's fiscal behaviour because its tax policies can affect the size of its grant. For a large state, an increase in its tax rate will increase the standard tax rate used to calculate the grant for that base and thereby reduce (increase) the state's grant if it has a high (low) relative fiscal capacity with respect to that base. In addition, a state's grant will increase if its relative fiscal capacity declines when it raises its tax rates. Our econometric results indicate that the equalisation system may have affected the Australian states' choice of tax rates.     

Tax morale,fiscal capacity,and war

This paper studies the effects of mobilization for war on the development of fiscal capacity and the values of tax compliance (tax morale). We propose a dynamic setting where governments may invest resources to improve the efficiency of the fiscal apparatus and the citizens' tax morality in order to raise the necessary revenues for the defense against a threat (external or internal), and parents optimally choose to transmit their preferences of tax compliance to children. Despite fiscal capacity and tax morale are initially substitutes, we show how a dynamic complementarity may arise in equilibrium from a more efficient transmission of the values of tax compliance in countries with high fiscal capacity, and this may explain why they tend to move together over time. Under reasonable conditions, we obtain that the effect of a higher threat of war on the steady-state level of the culture of tax compliance is negative when fiscal capacity is relatively low, and positive when the latter is large. We show cross-country evidence based on war frequency, fiscal capacity, and tax morale that is consistent with the results of our theory.     

Francesco Forte’s Contributions to <Emphasis Type="Italic">Essentials of Fiscal Sociology</Emphasis>

Francesco Forte has made major contributions to many areas of economics with the result that his theoretical work and applications have opened new areas of inquiry. This paper connects Forte’s work with the work of Jürgen Backhaus on fiscal sociology. Positioned at the crossroads of economics and sociology, the answers to these questions helped fill the void which gave rise to the field of fiscal sociology. Fiscal sociology is primarily a study of taxation and fiscal policies which illuminates core issues in the sociology of contemporary capitalism. It includes the causes of poverty and inequality in rich countries and adds to our understanding the basis for the inequality between rich and poor countries. Our paper reviews several of Forte’s papers on Pareto’s fiscal sociology and the failure of European planning for less-developed regions. The paper highlights Forte’s contributions to economic theory focusing on Pareto’s sociological theory and the influence of the European Union on regional development.