POLITICAL ECONOMY: TAXATION, SUBSIDIES, & REVENUE eJOURNAL
"A Conditional Funding Strategy to Address the Modern Food Environment: From Public Health Prevention to State and Local Preemption"
Duke Forum for Law & Social Change, 2013, Vol. 5, pages 39-63
JENNIFER L. POMERANZ, Temple University - Department of Public Health
The modern food environment fosters consumption of highly processed foods in the United States. This paper proposes a tax and spend strategy to address the health and financial burden that results from the modern food environment. Specifically, Congress should institute a manufacturers’ excise tax on producers of highly processed food products. This is a revenue-producing measure designed to provide conditional grants to qualifying state and local governments, agencies, tribes, territories, and non-government organizations to address the modern food environment and poor nutrition. As part of this strategy, the federal government would offer grants to non-profit organizations to engage in government speech as an innovative method to counter industry support for preemptive laws. This last strategy’s goal is to promote social change by educating citizens about preemptive legislation designed to put business interests above health and impede the ability of local governments to protect the people in their community. The paper concludes with a vision for the future direction of the tax and spend strategy.
"Lessons for International Tax Reform from the U.S. State Experience Under Formulary Apportionment"
KIMBERLY A. CLAUSING, Reed College - Department of Economics
This work undertakes a comprehensive analysis of the U.S. state experience under formulary apportionment of corporate income. While formulary apportionment eliminates the possibility of shifting income across states through accounting strategies that manipulate where income is booked, it may heighten the tax responsiveness of formula factors. The present analysis uses the substantial variation in corporate tax policy decisions of U.S. states over the period 1986 to 2012 to better understand the consequences of formulary apportionment. It examines the effects of policy choices regarding tax rates, formula weights, and other parameters on economic activity, estimating the tax sensitivity of employment, investment, and sales. With the inclusion of adequate control variables, results indicate that economic activity is not particularly sensitive to U.S. state corporate tax policy choices, especially in recent years. Still, tax policy choices have important effects on corporate tax revenues. These results suggest important lessons regarding possible international adoption of formulary apportionment.
"Applying Data Envelopment Analysis on Accounting Data to Assess and Optimize the Efficiency of Greek Local Governments"
MICHAEL DOUMPOS, Technical University of Crete (TUC) - Department of Production Engineering and Management
SANDRA COHEN, Athens University of Economics and Business - Department of Business Administration
The efficiency and effectiveness of local governments has become one of the main points of interest in public sector administration, as decision and policy making gradually move from the central to the local level. This paper introduces an efficiency analysis framework based on accrual accounting data obtained from the local governments’ financial statements. Data envelopment analysis is used to obtain efficiency estimates, which are analyzed through a second stage regression against a set of efficiency explanatory factors. Furthermore, the optimal reallocation of the municipalities’ inputs and outputs is explored to provide policy recommendations that a central government could implement in a budget reduction context. Detailed empirical results are presented from a panel data set of Greek municipalities over the period 2002–2009.
"Discriminatory Taxes are Unpopular Even When They are Efficient and Distributionally Fair"
Univ. of Copenhagen Dept. of Economics Discussion Paper No. 13-14
RUPERT SAUSGRUBER, Vienna University of Economics and Business - Department of Economics
JEAN-ROBERT TYRAN, University of Vienna, University of Copenhagen - Department of Economics, Centre for Economic Policy Research (CEPR)
We explore the political acceptance of taxation in commodity markets. Participants in our experiment earn incomes by trading and must collectively choose one of two tax regimes to raise a given tax revenue. A "uniform tax" (UT) imposes the same tax rate on all markets and is fair in that it yields the same – but low – income to participants in all markets. The "discriminatory tax" (DT) imposes a higher burden on markets with inelastic demand and is therefore efficient but it is also unfair in that incomes are unequal across markets. We find that DT are unpopular, as predicted. Surprisingly, however, DT remain unpopular when they are both efficient and produce a fair (equal) distribution. We conclude that non-discrimination (equal treatment) is a salient fairness principle in taxation that shapes voting on commodity taxes above and beyond concerns for efficiency and equal distribution.
"Time Delay and Support for Taxation"
SILVIA TIEZZI, University of Siena - Department of Economics
ERTE XIAO, Carnegie Mellon University - Department of Social and Decision Sciences
People often experience the benefits of taxation with time. We design experiments to test the hypothesis that delaying the benefits of taxation can lead to low support for taxes. In a dynamic market experiment with negative externalities, we consistently find that people are less willing to accept Pigouvian taxes, aimed at reducing negative externalities and restoring market efficiency, when the negative externalities are delayed. While people learn to adopt taxation when the negative externality occurs immediately, the resistance to taxation remains robust over time when the externality is delayed. Our data suggest that people are less likely to support taxation when they found it difficult to understand the working of the new institution. We discuss the policy implications of our findings for promoting support for taxation.
"Discussion of ‘Government Ownership, Corporate Governance and Tax Aggressiveness: Evidence from China’"
Accounting & Finance, Vol. 53, Issue 4, pp. 1053-1059, 2013
CHEN CHEN, The University of Auckland Business School
In this article, I discuss several aspects of the paper by Chan et al. (2013). After a brief introduction, the next three sections discuss the hypothesized links between government ownership, corporate governance, institutional factors and tax avoidance in Chan et al. (2013). The fifth section investigates some possible extensions on tax research in the setting of China, while the sixth section concludes this discussion.
About this eJournal
This eJournal distributes working and accepted paper abstracts of empirical and theoretical papers on different sources of government revenue as well as on issues related to financial assistance to businesses or particular economic sectors. The topics in this eJournal include the subjects in H2 from Section H of the classification system of the JEL.
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