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Based on an earlier report by Ono (2010), this paper presents consideration of a consumption tax and examines how tax reform to maintain the neutrality of pension benefits affects the income growth rate and the employment rate. A decrease in the rate of worker contribution (labour income tax rate) with an increase in a consumption tax raises employment, but the effect on income growth is ambiguous. A decrease in the rate of firm contribution with an increase in the consumption tax decreases employment and facilitates income growth. Therefore, if the unemployment rate must be decreased, then pension reform with a decrease in the rate of worker contribution should be selected. The results derived through the study described in this paper are consistent with the empirical facts. Moreover, for these analyses, we assume the other production function and confirm the robustness of the obtained results. [ABSTRACT FROM AUTHOR]

Our paper provides a primer on various ways that consumption taxes could be implemented and a discussion of some of the effects of replacing the income tax with a consumption tax. Laurence Kotlikoff lays out major problems with the U.S. fiscal system and proposes a comprehensive reform plan that addresses healthcare, Social Security, welfare, and taxes. Presumably, the difference arises because Kotlikoff is either using more pessimistic spending and tax assumptions than CBO is, or because Kotlikoff is using a longer (infinite) time horizon. [Extracted from the article]

Property transaction taxes—also known as stamp duty—are widely viewed as an inefficient form of taxation. In this paper, we examine the welfare implications of removing stamp duty in a general equilibrium overlapping generation model with heterogeneous agents. Our model features an idiosyncratic shock to housing preferences, which may create mismatch or induce households to move. We calibrate the model to the Australian housing market, and conduct counterfactual policy experiments where stamp duty is replaced with recurrent property or consumption taxes. We find that removing stamp duty raises household mobility and reduces the degree of housing mismatch substantially. When examining steady states, we find that newborn households prefer entering an economy with a recurring property tax rather than one with stamp duty. In contrast, when examining the transition we find that existing households prefer replacing stamp duty with a consumption tax. [ABSTRACT FROM AUTHOR]

The paper estimates the consequences for tax revenue and income distribution of the removal of the tax expenditures from Spanish Personal Income Tax (IRPF) in place during the 2013 tax year. The paper concludes that the removal of all the tax expenditures analyzed would increase revenue by €24,457 million (37.9% of the IRPF actual collection), and that the redistributive effect, measured by the Reynolds‐Smolensky index, would be reduced by 1.1%. The paper also analyzes sundry hypothetical scenarios involving the refunding to individuals of the tax collected through the removal of tax expenditures, and its distributive impact is quantified. Applications For Practice: As in other countries, Spanish personal income tax (IRPF) is fraught with tax expenditures, in the form of exemptions, deductions, allowances, special rates, tax credits, and so forth, the effects of which—in terms of effectivity, efficiency, and equity—are highly debated.The removal of most of these tax expenditures would result in a 37.9% increase in IRPF revenue in 2013 (€24,457 million), and a slight reduction of 1.1% in its redistributive effect, as measured by the Reynolds‐Smolensky index.It is possible to design tax or expenditure policies that compensate individuals for the increase in their tax liability resulting from the removal of tax expenditures, while maintaining or improving the redistributive effect of IRPF and reducing its efficiency costs.The implementation of an Earned Income Tax Credit in IRPF, financed by the removal of all tax expenditures, would have a highly progressive effect, and increases by about 70% of the redistributive effect of IRPF, before and after the elimination of tax expenditures. [ABSTRACT FROM AUTHOR]

This paper estimates Engel curves on the foreign content (outsourcing) and the foreign environmental taxes embedded in the consumption of final goods and services in the United States (U.S.). We estimate Engel curves using U.S. household income and consumption information from 1996 to 2011 and find that they are concave and shift down over time. Importantly, our results suggest a coherent picture where the foreign content and the foreign environmental taxes in U.S. household consumption bundles decreased on average over time primarily because of a composition effect where the significant income increase has led to a shift in consumption towards goods and services with lower foreign content and lower foreign environmental taxes. Both effects represent a movement along their respective Engel curves. Consequently, other effects besides income changes play a minor role in the evolution of consumer decisions and their relationship with foreign content and environmental taxes. [ABSTRACT FROM AUTHOR]

Prominent theories claim that young Europeans are increasingly socialist as well as divided from their elders on non‐economic issues. This paper asks whether age‐based polarisation is really growing in Europe, using new estimates of the ideological positions of different age groups in 27 European countries across four issue domains from 1981 to 2018. The young in Europe turn out to be relatively libertarian: more socially liberal than the old in most countries but also more opposed to taxation and government spending. These age divides are not growing either: today's differences over social issues and immigration are similar in size to the 1980s, and if anything are starting to fall. Analysis of birth cohorts points to persistent cohort effects and period effects as the explanation for these patterns; there is little evidence that European cohorts become uniformly more right‐wing or left‐wing with age. Hence age‐based polarisation need not be a permanent or natural feature of European politics but is dependent on the changing social, political and economic climate. [ABSTRACT FROM AUTHOR]

This paper examines the role of a 'green' value‐added tax in the competitive environment of firms. Using data on firms in Romania and leveraging the introduction of a tax reduction on organic products in 2019, I show that although the overall market for organic goods grows and potential to generate windfall profit exists, the market share of incumbent firms decreases because of intensified competition post‐reform driven by new entrants competing for profits in the market. The market share decreases by about 2 percentage points after the reform. The effect depends on the relative elasticity of demand vis‐à‐vis supply in the market and the ability of a firm to protect its sales from new market entrants. Firms operating geographically further from the main consumer (i.e., more rural firms) and further upstream from the retail sector are more vulnerable to losing market share because urban demand is less elastic than rural demand and retail demand is less elastic than primary demand. Firms that are in markets where it is easier to switch from non‐organic to organic and that are less capital intensive (i.e., have fewer fixed costs) are more vulnerable to losing market share to new market entrants. [ABSTRACT FROM AUTHOR]

This paper analyses and compares the performance of resource taxes and capital taxes in financing public goods while considering the positive effects of public expenditure on firm productivity. It is motivated by Franks et al. (2017), who argue that the advantage of the resource tax consists in its potential to reap foreign resource rents. I employ an analytical general equilibrium framework of n $n$ identical resource‐poor countries, where local firms use internationally mobile capital and a net imported resource in production as well as local public infrastructure. The latter is financed solely by either taxing the input of the resource or capital. The choice of the policy instrument is exogenous to policy makers and symmetric across countries. I find that expenditure on infrastructure renders the impact of fiscal policy on the terms of trade ambiguous under resource taxation and negative under capital taxation. Moreover, public expenditure weakens the outflow of factors moderating the deficit of public spending caused by tax competition. This holds for both policy scenarios. Considering both effects simultaneously, resource taxation cannot generally be identified as the policy to provide higher provision or efficiency. A numerical exercise shows cases for higher provision of either policy. [ABSTRACT FROM AUTHOR]

This paper develops a climate–economy model to study the joint design of optimal climate and fiscal policies in economies with overlapping generations (OLGs). I demonstrate how capital taxation, if optimal, drives a wedge between the market costs of carbon (the net present value of marginal damages using the market interest rate) and the Pigouvian tax (the net present value of marginal damages using the consumption discount rate of successive OLGs). In contrast to deterministic infinitely lived representative agent models, at the optimum, the capital income tax is positive, the carbon price equals the market costs of carbon but it falls short of the Pigouvian tax when (i) preferences are not separable over consumption and leisure; and (ii) labor income taxes cannot be age‐dependent. I also show that restrictions on climate change policy provide a novel rationale for positive capital income taxes. [ABSTRACT FROM AUTHOR]

This paper examines, in depth, the hypotheses explaining the tax effort of seven West African Economic and Monetary Union (WAEMU) countries over the period 1996–2018. The studies of Karakaplan and Kutlu were applied to the stochastic tax frontier model. This provides a new method for analyzing tax effort that solves potential endogeneity problems, especially those of income. This study confirms the positive impact of income, trade openness, urbanization, government capital spending and anticorruption on tax revenue mobilization, while the size of the agricultural sector has a negative impact on tax revenue. On the other hand, reforms of tax institutions have no effect on tax effort. The average tax revenue of the countries of the WAEMU is 11.34 and the average tax effort is estimated at 0.7901 over the period 1996–2018. Thus, these countries could achieve a tax revenue to GDP ratio of 13.72% if they fully exploit their potential. [ABSTRACT FROM AUTHOR]

Unemployment Insurance (UI) benefits were a central part of the social safety net during the COVID‐19 recession. UI benefits, however, are severely understated in surveys. Using administrative tax data, we find that over half of UI benefits were missed in major survey data, with a greater understatement among low‐income workers. As a result, 2020 official poverty rates were overstated by about 2 percentage points, and corrected poverty reached a six‐decade low. We provide data to correct underreporting in surveys and show that, compared to UI benefits, the UI exclusion tax expenditure was less targeted at low incomes. [ABSTRACT FROM AUTHOR]

In this paper we investigate if government balanced‐budget rules together with endogenous taxation may lead to aggregate instability in an endogenous growth framework. After highlighting the differences with the exogenous growth framework, we prove that under counter‐cyclical consumption taxes, while there exists a unique balanced growth path, sunspot equilibria based on self‐fulfilling expectations occur through a form of global indeterminacy. In addition, we argue that this result is empirically plausible for a large set of OECD countries and that it may also emerge with endogenous income taxes. [ABSTRACT FROM AUTHOR]

African Continental Free Trade Agreement (AFCFTA) is gradually becoming a reality and there are needs now more than ever to investigate how African countries will thrive under this new trade regime. Based on this consideration, this study seeks to investigate the revenue, welfare and trade effect of ACFTA on Nigerian economy with the Partial Equilibrium Analysis approach using the World Trade Integrated Solution‐Single Market Partial Equilibrium Simulation Tool (SMART) model. SMART is a trade simulation model developed by the World Bank and the UNCTAD using trade flow data and tariff data from Trade Analysis and Information Systems, the World Trade Organization Integrated Database and Consolidated Tariff Schedule. The findings from the study show that AFCFTA is a trade creating Free Trade Agreement in Africa and sectors like petrochemical industries, textile and maritime products are the leading trade creating sector in Nigeria. On the other hand, manufacturing activities in the production of sanitary, papers, electronics and automobiles are trade diverting in Nigeria. Overall, the total trade effect in Nigeria is US$ 145 million with an accompanying welfare effect of US$ 13 million. However, the Nigerian government might experience a loss of revenue of US$104 million as a result of tariff removal. Thus, this study concludes that AFCFTA is a trade creating and expanding policy but it comes at a huge loss of revenue on the part of the Nigerian government and this can be ameliorated with the introduction of the more comprehensive consumption tax system. [ABSTRACT FROM AUTHOR]

This article re‐examines the optimality of tax smoothing and optimal inflation persistence in the context of monetary models with cash constraints where the Friedman rule is not optimal. I consider distortionary taxes on either consumption or labor income. As a consequence of the non‐optimality of the Friedman rule, the Ramsey‐optimal policy features a tax rate volatility that is orders of magnitude larger than the cornerstone tax‐smoothing result of the standard Ramsey literature. The Ramsey results also imply an optimal inflation rate that is much more persistent than the existing results. When all consumption goods are subject to a cash constraint, purposeful tax and interest rate volatilities are used to smooth wedges. Therefore, in contrast to the widely accepted view in the literature that in RBC models wedge smoothing implies tax smoothing, this paper shows that this is not necessarily true. I also discuss the Ramsey problem in the context of the cash‐credit goods framework with non‐homothetic preferences where neither tax‐smoothing nor wedge smoothing result necessarily holds when the Friedman rule ceases to be optimal. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The literature on attitudes toward government budgets has been dominated by two distinct approaches, jointly studying both sides of the ledger (holistic approaches) and studying attitudes over spending and revenue separately (singular approaches). Despite both approaches being widely adopted, scholars have given limited attention to testing empirically how methodological differences in the approaches may affect measures of fiscal attitudes and the inferences we draw from those measures. In this paper, we ask, "Do the different approaches to studying the budget alter mass attitudes toward spending and taxes, and if so, how?" Using data from an Amazon MTurk survey experiment, we find that spending choices differ significantly (attitude instability) across the two approaches. On the revenue side, our results show that choices over taxation tend to remain consistent and stable, regardless of whether the choices include only taxes or the combination of taxes and spending. [ABSTRACT FROM AUTHOR]

This paper explores the impact of the soft drinks sugar tax introduced in the UK in 2018 on the purchasing behaviours of different geo‐demographic consumer segments. We analyse data for a composite good comprising the most popular sugar‐sweetened drinks (SSDs) using loyalty card data from one of the UK's largest supermarkets. We use pre‐levy data to predict the effect of the tax and corroborate our predictions by analysing actual consumption of the composite good in the first 5 months post‐levy. The results show that the impact of the sugar tax is likely to have the desired effect of reducing the purchase of SSDs. Moreover, though the impact of the tax is likely to vary across different geo‐demographic segments, the evidence suggests that its impact is likely to be greatest on the most vulnerable market segments – families on low incomes – who are among the highest consumers of SSDs in the UK. [ABSTRACT FROM AUTHOR]

The OECD recently conducted a wide-ranging review of the wealth taxes already in operation within its member countries, and new empirical research has also examined the impacts of existing wealth taxes in a developing country context. Keywords: capital levy; tax policy; wealth tax EN capital levy tax policy wealth tax 389 395 7 10/27/21 20210901 NES 210901 MOTIVATION Around the world, proposals for new taxes on the I stock i of wealth (a "wealth tax") were gaining traction even before the fiscal tumult that has followed the COVID-19 pandemic. Additionally - of direct relevance to a wealth tax - it would useful to investigate whether these additional benefits (if any) scale directly with increasing wealth or whether they are only evident at extremely high levels of wealth. In the absence of a wealth tax from which to obtain administrative data on asset holdings, one option - as recommended by the Wealth Tax Commission in its final report - would be for official statistics agencies to incorporate a new booster sample for top wealth into their main household surveys on wealth. [Extracted from the article]

This paper evaluates the first two arrows of Abenomics. The first arrow, aggressive monetary policy, was successful in lifting the Japanese economy out of deflation, although the 2% inflation target was not achieved. The real economy and financial markets recovered strongly. Unconventional monetary policy was successful through the channels of the yen and stock prices. The second arrow, "flexible" fiscal policy, can be interpreted as an enhanced counter‐cyclical policy, that is, to stimulate when needed, but tighten when possible. The first fiscal supplementary budget of February 2013 was a powerful boost to the economy. For fiscal consolidation, the consumption tax rate was hiked from 5% to 10% in two installments in April 2014 and October 2019. This helped to shrink the deficits. With strong macroeconomic performances, Shinzo Abe established a record as the longest‐serving prime minister in Japanese history. [ABSTRACT FROM AUTHOR]

This paper studies the protectionist effect of a non‐trade policy — a consumption tax — compared to that of a tariff on the Chinese automobile market. Our empirical findings suggest that both the consumption tax and the tariff can protect domestic automakers' market shares, but they can only shift a small portion of demand from imported cars to domestic cars. This demand exclusion is caused by the weak substitution between imported cars and domestic cars, and it is the underlying reason for the welfare loss caused by both the tariff and the consumption tax. A change in the consumption tax favorable to domestic manufacturers is equivalent to an additional 28% tariff, beyond the explicit 25% tariff, in terms of its protective effect on domestic manufacturers' market shares. [ABSTRACT FROM AUTHOR]

This paper examines the dynamic and long run effects of a shift from income taxes to consumption taxes in a growing small open economy. We introduce a government sector that maintains a balanced budget and expenditure at a constant proportion of domestic income to a small open economy Swan-Solow model. Our framework provides a previously unidentified dynamic effect that is robust to endogenising the savings rate. Lowering the income tax rate promotes economic growth and has a tick-curve effect on the current account balance, characterised by instantaneous deterioration, a period of recovery and gradual convergence to an improved position in the long run. [ABSTRACT FROM AUTHOR]

This paper studies the interaction between tax evasion and wage endogeneity within a Mirrleesian optimal tax framework. It characterizes the optimal marginal income tax rates on the skilled and the unskilled workers and the optimal amount of resources to be spent on deterring tax evasion. It shows that tax evasion weakens the incentives for the government to manipulate the marginal tax rates for the purpose of exploiting general equilibrium effects on wages. Moreover, the extent of this depends on the curvature of the evasion cost function. It also argues that marginal income tax rates are likely to be higher when the government attempts to deter evasion. [ABSTRACT FROM AUTHOR]

In this paper, we analyze optimal fiscal policies in an overlapping generations framework, where preferences exhibit aspirations in consumption and environmental quality as well as habit formation. We focus on the second best policies when the government needs to finance a given stream of public expenditures by using distortionary taxes. We derive necessary and sufficient conditions under which the competitive equilibrium is characterized by levels of capital and environmental quality that are too small and a level of labor supply that is too large. Our numerical simulations show that an optimal fiscal policy can be used as an effective stabilization device and that when consumption taxes are fixed, the planner implements maintenance investment and capital income subsidies while financing public spending through labor and fixed consumption taxes. [ABSTRACT FROM AUTHOR]

This paper provides an overview and analysis of wine regulations in an international and historical comparative perspective. Wine is an excellent sector to study government interventions because for centuries wine markets have been subject to many government regulations that differ greatly within and between countries. Wine consumption taxes, for example, range from zero in some countries to more than 100% in others. The European Union has extensive quantity and quality regulations for wine, while other major producers such as Australia and the United States are much less regulated. After a general overview of current regulations and historical evolutions, we analyze three key wine regulations in more detail: consumption taxes, planting rights, and geographical indications. Most wine regulations reveal a tension between the public interest and vested private interests. [ABSTRACT FROM AUTHOR]

This article introduces a series of articles on the life, contributions and legacy of economist and social crusader Irving Fisher. A group of papers and three comments considers Fisherian themes in monetary economics and macroeconomics. Two papers by James Tobin discuss Fisher's innovative Elementary Principles of Economics and Nature of Capital and Income. John B. Shoven and John Whalley and their discussants Alan J. Auerbach and Micahel J. Greatz, offer a modern perspective on Fisher as a founding father of public finance and his proposal on a consumption tax. The last group of papers and comments follows from Fisher's concern with the economic value of of improving public health.

WORK INCENTIVES The 34 percent rate apparently seems unworkably high to the authors particularly if expressed on its 52 percent tax-exclusive value - the tax that would be applied to people's purchases at checkout. Hence, to assess the workability of a 34 percent marginal tax on labor supply under the FairTax, we need to compare this rate with the current tax system's rate. The FairTax is a proposal to replace all federal taxation via a federal retail sales tax cum rebate (family allowance). [Extracted from the article]

In a real macroeconomic model, it is well established that a balanced‐budget rule based on consumption tax can rule out indeterminacy. The present paper shows, both analytically and numerically, that such a balanced‐budget rule induces indeterminacy and, hence, aggregate instability in a standard one‐sector cash‐in‐advance economy. From a policy perspective, our results raise possible concerns that balanced‐budget rules with endogenous consumption tax could have destabilizing effects under the current over‐easy monetary environment. [ABSTRACT FROM AUTHOR]

Using US cross-sectional data, this paper calculates the welfare cost of a 10 percent inflation for different individuals and finds that the difference in cost between the poorest 20 percent, measured by their net worth, and the richest 20 percent is in the order of 102 percent. That is, a poor person is on average willing to forgive 102 percent more of their total consumption in order to have inflation reduced from 10 percent to 0. In absolute terms this represents a cost of 0.461 percent of consumption for the poorest and 0.228 percent for the richest. I accomplish this by introducing preference heterogeneity in a monetary search model first developed by Lagos and Wright, and calibrate the model to match each agent's type of cash holdings, approximated by their holdings in transactional accounts that bear almost no interest, as a fraction of their net worth using data from the Survey of Consumer Finances. I also show that this welfare difference increases to 130 percent (2.28 percent for the poorest 20 percent and 0.992 percent for the richest 20 percent) whenever frictions in the use of money are imposed (holdup problem). This distributional effect is further augmented if more frictions in the terms of trade are present. The ability to explicitly model these frictions is the advantage of using this model. Hence, inflation in this framework, as other studies have shown, acts as a regressive consumption tax; and this regressiveness is augmented with the holdup problem. [ABSTRACT FROM AUTHOR]

This paper presents a simulation model based on the growth rate, the inflation rate, and the consumption tax rate in the future. Future tax revenues and fiscal expenditures are projected using regression models estimated from past data. The fiscal situation is called unsustainable if the outstanding amount of Japanese government bonds ( JGBs) becomes higher than the level of private sector financial assets. We focus on the general account of the central government, which is the source of JGB issues. We find that the higher the economic growth, the more likely it is that the fiscal situation is sustainable. When a larger portion of interest income is reinvested in JGBs, the chance is higher that the fiscal situation is sustainable. Most importantly, raising the consumption tax to 20% guarantees fiscal sustainability in most cases. Our analysis shows that without a consumption tax hike beyond the 10% rate, a fiscal crisis will be almost a certainty, even with a real economic growth rate of 2% despite a shrinking labor force. A reasonably quick hike of the consumption tax, namely a hike by 1% a year, up to 20%, combined with high or moderate economic growth rates, seems to keep the economy out of a fiscal crisis, where a moderate growth rate is defined to be generated by a productivity increase per working-age population of 1.9%, which was the average during the Koizumi years. [ABSTRACT FROM AUTHOR]

Tax policies and public spending reflect the taking and giving powers of the government. However, when thinking about these, the taking powers of government are perceived as the most prominent. Why is the government's relationship with society seemingly asymmetric in that give and take? What leads to these perceptions? This article's starting point is instability in corporate income taxes and government expenditure arrears as two features of poor fiscal governance associated with lower corporate investment in the market economy. The article then focuses on the political and technical relationships comprising budgetary governance and proposes feasible policy options. These policy options aim toward a path of corporate income tax stability and timely government payments through better balancing the give and take involved in running the government. [ABSTRACT FROM AUTHOR]

Copyright of Canadian Journal of Economics is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Empirical research into the impact of taxation on e-commerce has concluded that there is a significant positive relationship between local sales tax rates and the likelihood that a person will shop online. This paper finds that the tax sensitivity for online purchases at the local level is much lower than previously estimated and is not significant under previous general models. However, by using a splined tax-rate function, this paper finds that consumers living in counties with high sales tax rates are still sensitive to tax rates when deciding whether to shop online, while those in counties with low tax rates exhibit no significant sensitivity. [ABSTRACT FROM AUTHOR]

This paper develops a model of public abatement financed either by a pollution tax or by a consumption tax. It shows that consumption tax revenue-financed public abatement raises welfare more than pollution tax revenue-financed public abatement does when the pollution tax rate rises. This result is worthwhile for environmental protection policy makers when they are determining the revenue source of public abatement. [ABSTRACT FROM AUTHOR]

A widespread objection to the introduction of consumption tax systems claims that this would lead to high tax revenue losses. This paper investigates the revenue effects of a consumption tax reform in Germany. Our results suggest that the revenue losses would be surprisingly low. We find a maximum revenue loss of 1.6 per cent of annual GDP. In some years, we even find tax revenue gains. This implies that the current tax system collects little revenue from taxing the normal return to capital. Based on these results, we calculate a macroeconomic measure of the effective tax rate on capital income. [ABSTRACT FROM AUTHOR]

Irving Fisher wrote a significant number of papers towards the end of his career on the design of the U.S. tax system. These writings culminated in a book that he wrote with his brother Herbert in 1942. Fisher thought that the double taxation of saving under an income tax was extremely harmful to the economy and he therefore proposed a“spendings” tax or what he referred to as a“real income” tax. Even though he disliked the terminology, he advocated what today would be referred to as a progressive consumption tax. Fisher's analysis was both theoretical and practical. His 1942 book contained a proposed tax return that implemented his ideas. His analysis is surprisingly modern and relevant today. This paper presents the Fisher proposal and examines the current U.S. tax system in light of his tax views. We argue that Fisher would find that the U.S. tax system lacks intellectual coherence, is economically inefficient, and unnecessarily complex. [ABSTRACT FROM AUTHOR]

The labor force in Japan is projected to fall from 64 million in 2014 to 20 million in 2100, signaling unprecedented tax/transfer adjustments to achieve fiscal sustainability. In this paper, we develop a quantitative overlapping generations model to measure the impact of guest worker programs in Japan. Against a baseline general equilibrium transition in which the consumption tax adjusts to achieve fiscal sustainability, we compute alternative transitions with guest worker programs. Depending on the size and skill distribution of guest workers, these programs may mitigate Japan's fiscal imbalance problem with a relatively manageable increase in the consumption tax. ( JEL E2, E6, H5, J11, J15) [ABSTRACT FROM AUTHOR]

In 2014 the South African government implemented a youth employment tax incentive (YETI) scheme to address the high rate of youth unemployment. Its adoption has been hailed as a success story for evidence‐based policy. This article critically assesses that claim, focusing on the randomized trial of a wage‐subsidy voucher that was used to justify the adoption of the policy and econometric analyses of the incentive's efficacy that were used to justify its renewal. That evidence is shown to be materially flawed. The design of the randomized trial meant that its relevance to the policy question was limited and critical issues pertaining to the estimated effect of the intervention, external validity and scale‐up were not addressed. The process was similarly flawed, with evidence only made public after critical legislative decisions had been taken. Analysis of that process shows how supposedly rigorous evidence was used to obscure the limitations and risks of the proposal in service of pre‐existing positions, vested interests and political imperatives. This implies a high opportunity cost for the tax expenditures incurred through the incentive. The South African YETI thereby serves as a cautionary tale on randomized trials and the political economy of evidence‐based policy, particularly in developing countries. [ABSTRACT FROM AUTHOR]

This paper compares the second-best optimal tax on polluting consumption goods with the Pigovian tax, which would internalize marginal environmental damage at a second-best optimum. It is shown that the relationship between the optimal tax on polluting consumption and the Pigovian tax is determined by the substitutability between labour and polluting consumption or clean and polluting consumption, depending on whether a wage tax system or a commodity tax system is being considered. The key factor determining the relationship between the two taxes is gross substitutability between the two taxed goods. As long as there is gross substitutability, the optimal dirt tax exceeds the Pigovian tax. The opposite can occur if and only if the two goods are gross complements. [ABSTRACT FROM AUTHOR]

This paper studies optimal capital and labor income taxes when the benefits of public goods are age-dependent. Provided the government can impose a consumption tax, it can attain the first-best resource allocation. This involves the uniform taxation of the cohorts' labor income and a zero capital income tax. With no consumption tax and optimally chosen government spending, labor income should be taxed nonuniformly across cohorts and the capital income tax should be nonzero. Deviations of the public goods from their respective optima create distortions. These affect the labor supply decisions of both cohorts and capital accumulation, providing a further reason to tax (or subsidize) capital income. [ABSTRACT FROM AUTHOR]

In this paper, using multiagent simulations, the effect asset inequality has on an artificial society is analyzed. It is shown that it is possible for a sustainable society to decrease in asset inequality and at the same time increase economic activity. In sustainable societies, the asset inequality increases as the consumption tax is raised, and in artificial societies where the tax rate is the same, inequality increases in the society in which agents with even a small surplus undertake altruistic actions. In sustainable societies that employ both income and consumption tax, an increase in asset inequalities leads to an increase in economic activity. But in sustainable societies which levy only the income tax, this result does not necessarily hold. These results show that if economic activity is increased in sustainable societies where the consumption tax rate is raised for the sake of fiscal stability, an expansion in inequality is an acceptable consequence. However, the sustainable society with the highest economic activity is realized when only the income tax is levied. In sustainable societies that levy only income tax, it is possible to decrease inequality while simultaneously increasing economic activity. © 2008 Wiley Periodicals, Inc. Electron Comm Jpn, 91(2): 14–22, 2008; Published online in Wiley InterScience (www.interscience.wiley.com). DOI 10.1002/eej.10023 [ABSTRACT FROM AUTHOR]

This paper examines the incidence of taxation in Vietnam, using data from the Living Standards Survey of 1997–1998 and an input–output matrix for 1997. The tax system in 1998 was slightly progressive, taking the equivalent of 7.8percent of spending for households in the lowest, and 10.3percent from households in the highest expenditure quintile. The replacement of the turnover tax by a value-added tax in January 1999 made the system marginally more progressive, and the falling importance of taxes on trade has had a negligible effect on the overall incidence of the tax system. The tax system is progressive overall because business income taxes fall mainly on better-off households; and low-income households rely heavily on home consumption, which is untaxed. Against this, agricultural taxes and fees are highly regressive. The recent phasing out of the agricultural land use tax is making the tax system more progressive; however, efforts since 2004 to limit price increases for motor fuels have effectively provided a relatively greater subsidy to rich than to poor households. [ABSTRACT FROM AUTHOR]

This paper provides new estimates of the revenue elasticities of income and consumption taxes in the UK over the period 1989--2000. Using new analytical expressions for consumption taxes, these elasticities are esti-mated from information on relatively few parameters, almost all of which are readily available from published sources. Changes in consumption patterns over time, and income tax parameters, are found to be important for the magnitude of consumption tax elasticities. [ABSTRACT FROM AUTHOR]

Abstract A poll tax is usually seen as the standard example of a lump sum tax and therefore as allocationally efficient. In this paper, it is shown that in a dynamic setting with endogenous fertility, a poll tax may yield a Pareto-inferior outcome as compared to a percentage consumption tax. [ABSTRACT FROM AUTHOR]

This paper reviews, and synthesises within a uniform framework, a number of analytical results on the built-in flexibility of taxation. Established results for income taxes are reviewed and integrated with recent results for consumption taxes. These help to provide a better understanding of the determinants of the revenue responsiveness properties of different taxes. They also provide convenient expressions for the calculation of tax revenue elasticities in practice. It is shown that the magnitude of revenue elasticities can be expected to differ substantially for alternative taxes, for different forms of the same tax, and for the same tax over time as incomes change relative to tax thresholds and as consumption patterns change. These results are especially relevant for the many industrialised countries which have undertaken major fiscal reforms in recent years with, often unintended, consequences for revenue elasticities. [ABSTRACT FROM AUTHOR]

This paper derives analytical expressions for the revenue elasticity of consumption taxes and combined income-consumption tax systems, analogous to those familiar for income taxes. It provides measures of tax revenue elasticities which can readily be applied in practice. Analytical results suggest that, unlike income taxes, consumption tax revenues are likely to be income-inelastic in practice, and total income plus consumption tax revenue, though generally elastic, can be expected to decline over time in the absence of counterveiling fiscal reforms. The results also provide some insight into the effects on tax revenue growth (often unintended or unknown) of reforms made with other policy objectives in mind. [ABSTRACT FROM AUTHOR]

We provide a quantitative analysis of the distributional effects of the 2018 increase in tariffs by the United States and its major trading partners. We build a trade model with incomplete asset markets and households that are heterogeneous in their age, income, wealth, and labor skill. When tariff revenues are used to reduce distortionary taxes on consumption, labor, and capital income, the average welfare loss from the trade war is equivalent to a permanent 0.1% reduction in consumption. Much larger welfare losses are concentrated among retirees and low‐wealth households, whereas only wealthy households experience a welfare gain. [ABSTRACT FROM AUTHOR]

The main contribution of this paper is to provide the estimates of the degree of progressivity (or regressivity) of the sales or excise tax on more than 300 individual consumption items. This is the first tax incidence study which considers such a fine classification of goods and services. The estimates based on the Australian Household Expenditure Survey 1975-76 provide a guideline for determining the tax rates on individual consumption items. Several interesting findings which emerge from the numerical results given in the paper suggest the usefulness of considering such a fine classification of goods and services. [ABSTRACT FROM AUTHOR]

This paper concentrates on cases where at the time of selecting a portfolio an investor has incomplete knowledge of the tax rates which will be effective in the future. This may be the situation in a parliamentary election year if rival parties are in favour of corporation income taxation and consumption taxation, respectively. In some countries uncertainty about tax rates may be a more permanent feature; for example, at all times there may be a non-zero probability of complete confiscation of investment profits. Under such circumstances the tax rate can appear as a random variable from an investor's point of view. In this way uncertainty about after-tax income can reflect uncertainty as to the tax rates which eventually will become effective--political risk--as well as uncertainty as to before-tax returns--commercial risk. [ABSTRACT FROM AUTHOR]

This article studies police financing with a focus on the difference in the timing between federal and local government funds. In general, federal government funds came from income taxes collected before possible appropriative activities while local government funds came from consumption taxes collected afterwards. We find that income‐tax financing results in more workers, more police, and fewer thieves when appropriation and tax rates are the same between the two cases. Funding the police before possible appropriative activities works as a deterrence. Our findings show the complexity of studying crime and police financing even in a highly stylized model. [ABSTRACT FROM AUTHOR]

Destination-Based Cash Flow Tax: The Destination-Based Cash Flow tax (DBCFT; Auerbach, [5]) is a consumption-based replacement for the corporate income tax rather than a full consumption tax. Other consumption taxes, like the X-tax and personal expenditure tax, feature graduated rates. CONSUMPTION TAXES A consumption tax, most simply, is a tax on what people spend on goods and services. Personal Expenditure Tax: A personal expenditure tax (PET) imposes a tax on wages and net capital income ( I W i + I R i - I I i ) like the flat tax and X-tax. [Extracted from the article]