Found 50 article(s) for author 'Taxation'

Tax Administration vs. Tax Rates: Evidence from Corporate Taxation in Indonesia

Tax Administration vs. Tax Rates: Evidence from Corporate Taxation in Indonesia. Rema Hanna, August 2019, Paper, “Developing countries collect a far lower share of GDP in taxes than richer countries. This paper asks whether changes in tax administration and tax rates can nevertheless raise substantial additional revenue – and if so, which approach is most effective. We study corporate taxation in Indonesia, where the government implemented two reforms that differentially affected firms. First, we show that increasing tax administration intensity by moving the top firms in each region into “Medium-Sized Taxpayer Offices,” with much higher staff-to-taxpayer ratios, more than doubled tax revenue from affected firms over six years, with increasing impacts over time. Second, using non-linear changes to the corporate income tax schedule, we estimate an elasticity of taxable income of 0.59, which implies that the revenue-maximizing rate is almost double the current rate. The increased revenue from improvements in tax administration is equivalent to raising the marginal corporate tax rate on affected firms by about 23 percentage points. We suggest one reason improved tax administration was so effective was that it flattened the relationship between firm size and enforcement, removing the additional “enforcement tax” on large firms. On net, our results suggest that improving tax administration can have significant returns for developing country governments.Link

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Be very skeptical about how much revenue Elizabeth Warren’s wealth tax could generate

Be very skeptical about how much revenue Elizabeth Warren’s wealth tax could generate. Lawrence Summers, June 28, 2019, Opinion, “Sen. Elizabeth Warren, D-Mass., has made her proposed 2 percent wealth tax on those worth more than $50 million a central part of her presidential campaign. Emmanuel Saez and Gabriel Zucman, two economists at the University of California at Berkeley, who helped developed the proposal, estimated it it would rake in $187 billion a year. In April, we published a piece in the Washington Post suggesting that this estimate was likely overly optimistic. This week, Saez and Zucman published a rejoinder.” Link

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Consumption Taxes, Redistribution and Informality

Consumption Taxes, Redistribution and Informality. Anders Jensen, 2019, Paper, “We study how the presence of large informal sectors in developing countries impacts the distributional properties of consumption taxes. We assemble a dataset of household expenditure using micro-data from 20 countries at different levels of economic development. Using the place of purchase to proxy for informal consumption, we show a large negative relation between informal consumption shares and households’ total expenditure, which is robust to product and geography controls. This implies that consumption taxes are de-facto progressive: households in the top decile pay 70% more taxes as a share of expenditure than households in the bottom decile. Finally, we build a model of optimal commodity taxation in the presence of informal consumption, which we calibrate to our data. We find that optimal tax rates are less differentiated across products with an informal sector. Tax exempting necessities, such as food, is rarely optimal as it leads to only a marginal gain in progressivity.Link

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Independent Taxation, Horizontal Equity, and Return-Free Filing

Independent Taxation, Horizontal Equity, and Return-Free Filing. Jeffrey Liebman, 2019, Book Chapter, “Switching from joint to independent taxation of spouses in married couples would reduce marginal tax rates on secondary earners, make the tax system marriage neutral, and facilitate return-free filing through exact withholding. This switch would, however, abandon the perspective that total household income is the best measure of ability to pay. This paper investigates the vertical and horizontal equity implications of a switch from joint to independent taxation of the sort that might occur in conjunction with adoption of return-free filing.Link

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Effects of Austerity: Expenditure- and Tax-based Approaches

Effects of Austerity: Expenditure- and Tax-based Approaches. Alberto Alesina, Spring 2019, Paper, “Sometimes governments need to reduce their budget deficits aggressively. These policies are labeled “austerity.” Almost always austerity is needed because excessive debt has been accumulated, as a result of policy mistakes and political distortions (Alesina and Passalacqua 2016; Yared, in this issue). The austerity policies embraced by several European countries starting in 2010 have generated an extraordinarily harsh policy debate. One side has argued that austerity is (almost) always a bad idea. From this perspective, even European countries that were experiencing serious difficulties in financial markets—either by being totally cut off from borrowing like Greece, or by paying high risk premia like Portugal, Spain, Ireland, and Italy—should have continued to stimulate their economies with high levels of government spending. Austerity, the argument continues, was self-defeating because the recessions it induced, or extended, only increased government debt as a ratio of GDP. Blanchard and Leigh (2014) argued that this round of austerity was particularly costly: in other words, fiscal multipliers were especially high. The other side argued that postponing austerity would have caused Effects.Link

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Debate: Tax Competition and Global Interdependence

Debate: Tax Competition and Global Interdependence. Mathias Risse, April 29, 2019, Paper, “We are very grateful for written comments and feedback from Andreas Cassee, Peter Dietsch, Joachim Helfer, Martin O’Neill, Thomas Rixen, Kate Vredenburgh, Gabriel Wollner, and two anonymous referees. Peter Dietsch engaged with our article at various stages and each time provided extremely generous responses. We are grateful for the opportunity to present earlier versions of this article and receive productive feedback at the Colloquium for Political Philosophy, Humboldt University Berlin; the Political Theory Workshop, University of York; and the Political Theory Workshop, University of Hamburg. Marco Meyer gratefully acknowledges financial support from the Leverhulme Trust.Link

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A broader tax base that closes loopholes would raise more money than plans by Ocasio-Cortez and Warren

A broader tax base that closes loopholes would raise more money than plans by Ocasio-Cortez and Warren. Lawrence Summers, March 28, 2019, Opinion, “Tax reform debates have been transformed in recent weeks by a shift in emphasis from revenue raising and progressivity to an emphasis on going after the rich for the sake of equality and justice. Bold proposals from Representative Alexandria Ocasio-Cortez of New York, for a 70 percent marginal tax rate on top earners, and from Senator Elizabeth Warren of Massachusetts — a 2020 Democratic presidential candidate — for a wealth tax on those worth more than $50 million have attracted widespread attention.Link

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