Increase In Tax Rate Research Articles

The Effect of Tax Avoidance and Tax Evasion on the Performance of South African Economy

Using a quantitative longitudinal trends analysis, this study analysed the link between tax evasion and avoidance. The main aim was to assess the implications of evasion and avoidance of taxes on South African economy progress from 1994-2021. Publically secondary data available from South African Revenue authority were gathered. The data gathered provided us with basis of longitudinal statistical analysis of the extent of tax evasion and or tax avoidance affected the economic growth in the years 1994-2021. The Eviews 10 Results was used to estimate elasticities and buoyancies for major taxes with respect of South Africa’s economic growth for years 1994-2021. The natural logarithm of the gap between total budgeted tax income and realised tax income was also employed as a metric of tax evasion and avoidance in South Africa for this key research work. Ordinary Least Squares Regression (OLS) regression analysis was employed to evaluate whether the link between Gross Domestic Product (GDP) and tax evaded and avoided is strong or weak. Test for stationarity to see whether the parameter does not vary over time and for OLS was performed. The overall analysis of tax evasion and avoidance upon South African economy showed the increased tax revenue resulted in surpluses between tax revenue budgeted, tax revenue collected and economic growth (GDP), meaning tax evasion and avoidance in South Africa are minimal. The study's findings disprove prior studies that suggest that tax evasion and tax avoidance seriously affect Gross Domestic Products (GDP) and refute the null hypothesis of this study. However, the study’s results further revealed that increasing tax rates was said to have triggered a positive trend towards economic growth or GDP (actual revenue collected is more than expected taxation revenue annually to cover tax evaded and avoided. As far as policy is concerned the conclusion is reassuring that tax evasion and avoidance has minimal effect upon economic growth as long as tax rates are being risen. The results of this study provide implications for government that specific insights should allow policy makers to gain a better understanding on the key variables that are potentially associated with tax evasion and avoidance. Finally, the study contributes knowledge that is pertinent to an emerging country and provides much needed insights into the magnitude of the extent of tax evasion and avoidance on the county’s economic growth progress.

Tax and price stability in selected African countries: A GARCH-MIDAS approach

Motivated by the debate on how best to use tax as a policy tool to fill the huge development financing gap in African countries on the one hand, and achieve price stability objective on the other hand, this paper examines the role of different tax measures in the predictability of price stability in selected African countries using a GARCH-MIDAS framework. We find that taxes contribute significantly to inflation volatility, albeit with mixed outcomes. While the results show that raising income, profits and capital gains tax for most African countries heightens inflation volatility, except for Madagascar, we also find that overall tax revenue and customs and other import duties tax had no significant impact on inflation volatility in most of the countries. We also record out-of-sample forecast gains in accounting for tax in the prediction of inflation volatility. For policy, the paper underscored the need for country-specific tax policy designs and implementation strategies. These may include to expand the tax net and improve efficiency of tax collection and administration (for countries where a further increase in tax rate could heighten inflation volatility or in addition consider a marginal increase in tax rate if tax is not a key predictor of inflation). The general policy option is to diversify and stabilize non-tax revenue streams for consistent funding of essential public goods and services and developmental initiatives.

Analysis of Mining Rent Sharing : Case of the Kamoa-Kakula Project

This article aims at analyzing the rent sharing within the framework of the Kamoa-Kakula project which consists of the exploitation of a copper mine, located in the DRC. Based on data from the Integrated Development Plan of this project, published in October 2020, we used the FARI model approach to analyze the tax regime of the 2018 mining code and estimate the share falling to the State and the investors. Analysis of the results of our estimates shows, on the one hand, that the tax burden is close to observed international trends. Expected state revenues are USD 7.3 billion, according to the base scenario, while the Average effective tax rate (AETR) would be between 40.6 and 53.1%. On the other hand, although the innovations introduced increase the AETR, the latter tends to increase with the profitability of the project. Which allows us to conclude that this tax regime remains progressive, despite the increase in tax rates. Although theoretically, this new code seems advantageous for the State, its implementation should be accompanied by measures aimed at strengthening tax administration and control techniques, with the aim of confronting tax optimization practices.

ОСОБЕННОСТИ НАЛОГОВОЙ СИСТЕМЫ РЕСПУБЛИКИ КОРЕЯ

The article examines the features of the current tax system of the Republic of Korea. The relationship between the tax system and the level of economic development of the state is obvious and undeniable: the more transparent, rational and efficient the tax system is, the more budget formation is based on tax revenues and the greater the ability of the state to finance the performance of its functions, including ensuring the socio-economic development of the country, which fully corresponds to the essence of the tax. The thesis was used as the basis for the research, according to which the tax system of the state is a set of taxes and fees levied in accordance with the procedure established by law, the system of tax authorities, as well as the methods and forms of taxation and tax administration used by them. Based on the analysis of the legislative base of the Republic of Korea, the current structure of taxes and fees, the system of tax authorities, forms and methods of taxation and administration of tax revenues to the country's budget system are considered. Based on the analytical resources of the exchange portal Take-profit.org It has been revealed that the current policy of the Government of the Republic of Korea to curb the increase in tax rates on a number of significant taxes, combined with traditional tax incentives to stimulate exports of products from companies in a number of key industries, leads to an expansion of debt financing of the economy and ultimately to an increase in the debt burden on the economy. In this regard, the dynamics of the country's debt burden was compared with the dynamics of a number of countries belonging to the G20 group. Based on statistical data from the Organization for Economic Cooperation and Development, the structure of tax revenues has been identified both by major groups (national and local) and by individual types.

ОСНОВНЫЕ ПРИОРИТЕТЫ БЮДЖЕТНОЙ ПОЛИТИКИ РОССИЙСКОЙ ФЕДЕРАЦИИ В УСЛОВИЯХ МЕНЯЮЩЕГОСЯ МЕСТА РОССИИ В СОВРЕМЕННОМ МИРЕ

The article examines statistical data on the volumes of revenues and expenditures of the federal budget of the Russian Federation, as well as expenditures on national defense, national secu-rity and social policy for 2023-2026. A conclusion is made about the stability of budgetary resource spending. An analysis of changes in tax legislation from 2025, the implementation of which determines the implementation of budget policy in Russia, is carried out. The main innovations boil down to an increase in tax rates and an expansion of the list of taxable items. This will increase tax collection and the revenue side of the budget. An analysis of budget expenditures for the implementation of state pro-grams in the considered priority areas of activity of the Russian Federation showed that quite large vol-umes of budget financing are allocated for these purposes. The level and dynamics of the allocation of financial support are different. There will be no significant decrease or increase in the volume of budget financing in the next two-year period for all analyzed state programs. This is a positive moment, indicating the stability of the budget policy in the Russian Federation. The negative aspects include the potential existence of a situation in which a significant increase in budget expenditures is possible, their significant redistribution across industries and areas of activity, and a reduction in budget financing for a number of expenditure items. These are objective reasons that are currently associated with great difficulties in forecasting the development of events. The paper examines the regulatory framework concerning the pri-orities of budget policy in the medium term. The main areas include increasing the openness of budget procedures, the level of tax collection, the quality of tax administration, developing the institute of "pref-erential taxation", focusing on the most complete long-term forecasting and budget planning, optimizing budget financing with maximum focus on "goals-costs-results", focusing on the development of scientific research, radio-electronic, machine-tool industries, expanding the possibilities for using information technologies in the budget sector and strengthening control over the expenditure of budget financing.

Сценарная оценка макроэкономических эффектов прогрессивного налогообложения в России

The purpose of the study is to assess the impact of alternative options of progressive taxation on Russia’s macroeconomic performance. For quantitative assessments, a neoclassical general equilibrium model with heterogeneous households subject to idiosyncratic income shocks was used. Three groups of scenarios were analyzed, setting a threshold progressive tax scale with thresholds of 30, 50, and 70 thousand rubles, under which state income tax revenues (1) grow, (2) remain unchanged, and (3) decline. The maximum personal income tax rate in the analyzed scenarios was 25%. Steady states and transitions were calculated for the scenarios. According to the quantitative estimates, the first reform leads to a loss of 0.3% to 1.3% of GDP in the long run, depending on the assumed rates and threshold. Despite the increase in lump-sum transfers, aggregate household consumption decreases by 0.5–1.7% in all cases. The second reform leads to a loss of 0.2% to 0.6% of GDP in the long run. The third reform leads to insignificant fluctuations of GDP within 0.1%: GDP increases at the threshold of 30 thousand rubles and decreases at other thresholds. The scale of inequality reduction, as measured by the Gini coefficient, increases with an increase in the top tax rate. However, as the threshold increases, the depth of the Gini index reduction first increases and then decreases. In the short run, there is upward pressure on wages and prices. This is because a decrease in labor supply with unchanged capital in the short run leads to an increase in wage rates (a shift along the labor demand curve), and an increase in wage rates means an increase in marginal costs for firms, leading to higher prices.

Taxes and Customs Duties as Instruments for Extracting Oil Rent into the State Budget: The Case of Russia

For countries focused on the extraction and processing of natural resources, including Russia, a crucial task is to ensure the rational extraction and distribution of natural rent. The tax model applied to natural rent should facilitate its optimal allocation to the budget without undermining the motivation of resource users to invest. This study seeks to gauge the extent of oil rent extraction into the Russian budget and suggest strategies to enhance the efficacy of redistributing oil rent to the state budget. Our hypothesis proposes that export customs duties, compared to the mineral extraction tax, prove more effective in achieving the desired redistribution from resource users to the budget. To assess the extent of oil rent extraction, we devised a methodology based on calculating the oil rent generated in Russia. This method involves measuring the difference between the income generated by the oil industry and the total expenses incurred by oil sector companies. Our analysis reveals that, from 2005 to 2022, up to 87% of the oil rent generated in Russia was extracted through rent payments to the state budget. However, in recent years, the degree of oil rent extraction has decreased to 56%. This decline can be attributed to the tax maneuver initiated in Russia since 2015, entailing a reduction and eventual elimination of export customs duties, coupled with an increase in the mineral extraction tax rate. Our results indicate a diminishing effectiveness of rent-based taxation in Russia due to the reduced fiscal significance of rent payments. Furthermore, their regulatory function, designed to incentivize taxpayers for investment contributions, has weakened. These findings offer valuable insights for shaping fiscal policies and lay the groundwork for further research in this domain.

IDENTIFYING BEHAVIORAL RESPONSE TO TAX CHANGE OF LABOR INCOME IN UKRAINE

Introduction. The National Revenue Strategy states that one of the directions for the further development of the national taxation system is the restoration of the progressive rates’ scale of personal income tax. Such a proposal looks appropriate and corresponds to the trends in the development of the labor market, the system of income generation in the national economy, and the demands of society. At the same time, the opportunistic reaction of taxpayers to the introduction of additional (increased) tax rates may lead to further evasion of labor income from taxation and, accordingly, an increase in tax risks of the state budget. Purpose of the article is to identificate of the behavioral response effect of the economic agents to tax change of labor income in Ukraine. Results. Changes in the taxation of labor income in 2015-2017 are characterized by the dynamics of such analytical indicators as the average effective tax rate and the tax wedge. The nominal growth of the wage fund in 2016 and 2017 is due to the following changes in taxation: an increase in the tax base and an increase in the average effective tax rate. In the short and medium term, reducing the tax burden did not have the expected positive effect, as predicted by the logic of Laffer's model. There is a significant increase in the share of wages at the average level, from 53.5% in 2012 to 63.8% in 2020. The share of labor income in the intervals from the lowest to the average earnings as of 2020 was more than 80%. The presence of an alternative system of income taxation with a significantly lower level of tax burden than the general system creates additional risks of effective implementation of personal income tax with a progressive scale of rates. Conclusions. The system of formation and distribution of labor income has undergone significant changes. The extremes of the income distribution (lowest and highest) were in relative gain compared to others. the introduction of a progressive scale of taxation rates exclusively for labor income in Ukraine does not have sufficient fiscal potential. In the case of a suboptimal political decision, with insufficient institutional capacity of control bodies and the presence of an alternative system of income taxation, there is a high probability of a significant increase in tax risks for state and local budgets.

The State Capacity Ceiling on Tax Rates: Evidence From Randomized Tax Abatements in the DRC

This paper investigates how tax rates and tax enforcement jointly impact fiscal capacity in low‐income countries. We study a policy experiment in the D.R. Congo that randomly assigned 38,028 property owners to the status quo tax rate or to a rate reduction. This variation in tax liabilities reveals that the status quo rate lies above the revenue‐maximizing tax rate (RMTR). Reducing rates by about one‐third would maximize government revenue by increasing tax compliance. We then exploit two sources of variation in enforcement—randomized enforcement letters and random assignment of tax collectors—to show that the RMTR increases with enforcement. Including an enforcement message on tax letters or replacing tax collectors in the bottom quartile of enforcement capacity with average collectors would raise the RMTR by about 40%. Tax rates and enforcement are thus complementary levers. Jointly optimizing tax rates and enforcement would lead to 10% higher revenue gains than optimizing them independently. These findings provide experimental evidence that low government enforcement capacity sets a binding ceiling on the revenue‐maximizing tax rate in some developing countries, thereby demonstrating the value of increasing tax rates in tandem with enforcement to expand fiscal capacity.

Maintaining Progresiveness of Personal Income Tax Rates in The Indonesian Income Tax Law

This research is related to the argumentation of the plans of several tax authorities, including the Indonesian authorities, to increase the personal income tax rate. The imposition of taxes through increased individual tax rates is one way for post-Covid-19 funding. The increase in tax rates is considered not to pose a risk to consumption or the principle of tax equity. This study uses a descriptive quantitative research method that tries to explain the planned increase in tax rates by the Indonesian tax authorities is by international trends or practices, the principle of justice, and taxpayer behavior. The comparison of the taxable lower limit, rate, GDP Per Capita, PKP Upper Limit, Number of Taxable Layers, and the impact of changes in individual tax rates are used to explain this research. The G-20 and ASEAN countries were selected based on the GDP per Capita scheme and geographical proximity. This study aims to answer the relevance of the implication of imposing progressive rates with Indonesian conditions, the plan to increase tax rates for Personal Income Tax and increase the number of taxable layers. The review of the threshold of taxable income also gets a portion of this research as well. This study also reviewed the rate mantaing from 30% to return to the 35% rate. The results of the study show that the wishes of the Indonesian tax authorities are in line with trends in state financing after the Covid-19 pandemic. This rate increase is not without risk. This rate increase will have implications for changes in the behavior of individual taxpayers who are affected by regulatory changes. The plan to change the individual tax structure should also consider the principles of fairness, progressiveness, general principles of tax reform, and changes in the behavior of taxpayers who are affected by regulatory changes. Changes in tax rates should increase taxpayer voluntary compliance.

How does environmental regulation affect corporate tax burdens? Evidence from China's environmental courts

This research examines how environmental regulation impacts corporate tax burdens. Although the literature argues that environmental policies exacerbate firms' tax avoidance, we offer a new insight from the perspective of government behaviour. Using the difference-in-differences approach and data on Chinese listed manufacturing firms from 2003 to 2019, we find that the establishment of environmental courts in China results in a 1.70 percent increase in corporate effective tax rates. The effect is significant only for private firms and is more pronounced in cities with stringent environmental regulations and fiscal stress. Tougher tax enforcement and the reduction of preferential tax policies are two potential channels. Given that environmental regulation reduces the tax base, local governments implement tougher tax enforcement and reduce preferential tax policies to maintain necessary tax revenues. Our study highlights the role of government in determining corporate tax burdens and evaluates the hidden tax costs of environmental regulation.

Keynesyen Tasarruf Fonksiyonu ve Türkiye Ekonomisi Analizi: 1985-2021

The aim of this study is to test the Keynesian savings function for the Turkish economy. To achieve this goal, the fundamental savings function proposed by Keynes was utilized, and data from the years 1985 to 2021 were used for the Turkish economy. The determinants of savings in the model include GDP per capita, income tax rates, deposit interest rates, and inflation rate. The selected variables in the model are in line with the literature. Empirical analysis determined that the most suitable method is the Autoregressive Distributed Lag (ARDL) approach. Based on the conducted empirical analysis, an increase in GDP per capita and deposit interest rates leads to an increase in the amount of savings. On the other hand, an increase in tax rates and inflation rate reduces the amount of savings. According to the findings obtained from the study, the Keynesian savings function is applicable to the Turkish economy for the years 1985 to 2021.

Impact of soda tax on beverage price, sale, purchase, and consumption in the US: a systematic review and meta-analysis of natural experiments.

As a primary source of added sugars in the US diet, sugar-sweetened beverage (SSB) consumption is presumed to contribute to obesity prevalence and poor oral health. We systematically synthesized and quantified evidence from US-based natural experiments concerning the impact of SSB taxes on beverage prices, sales, purchases, and consumption. A keyword and reference search was performed in PubMed, Web of Science, Cochrane Library, Scopus, and EconLit from the inception of an electronic bibliographic database to Oct 31, 2022. Meta-analysis was conducted to estimate the pooled effect of soda taxes on SSB consumption, prices, passthrough rate, and purchases. Twenty-six natural experiments, all adopting a difference-in-differences approach, were included. Studies assessed soda taxes in Berkeley, Oakland, and San Francisco in California, Philadelphia in Pennsylvania, Boulder in Colorado, Seattle in Washington, and Cook County in Illinois. Tax rates ranged from 1 to 2 ¢/oz. The imposition of the soda tax was associated with a 1.06 ¢/oz. (95% confidence interval [CI] = 0.90, 1.22) increase in SSB prices and a 27.3% (95% CI = 19.3, 35.4%) decrease in SSB purchases. The soda tax passthrough rate was 79.7% (95% CI = 65.8, 93.6%). A 1 ¢/oz. increase in soda tax rate was associated with increased prices of SSBs by 0.84 ¢/oz (95% CI = 0.33, 1.35). Soda taxes could be effective policy leverage to nudge people toward purchasing and consuming fewer SSBs. Future research should examine evidence-based classifications of SSBs, targeted use of revenues generated by taxes to reduce health and income disparities, and the feasibility of redesigning the soda tax to improve efficiency.

Property tax incentives to divorce strategically

PurposeThe paper aims to examine the role played by property tax in influencing strategic decisions regarding marital separation and divorce in Italian municipalities.Design/methodology/approachThe empirical analysis is conducted on a sample of 6,458 Italian municipalities by applying the ordinary least squares (OLS) and instrumental variables (IVs) approaches.FindingsThe estimation results show a small increase in marital separations and divorces as the difference between the municipal secondary and primary home tax rate increases. Specifically, an increase of 1‰ in the property tax rate differentials is accompanied by an increase of six marital separations and four divorces per 1,000 inhabitants.Research limitations/implicationsThe main limitation of the analysis is that the strategic behavior of the married couple is inferred from econometric analysis with data aggregated at the municipal level. To investigate this phenomenon more precisely, it would be useful to have individual data collected by surveys on strategic divorce decisions due to property tax incentives.Originality/valueThis study contributes to the scant existing literature on the tax incentives for strategic divorce. It is the first study to empirically investigate the effects of property tax on separation and divorce decisions by investigating the Italian context. In Italy, a property tax was introduced in 1993, encouraging “false” divorces by spouses with a second home since the tax on the secondary home was set at a rate higher than that on the primary residence. Moreover, there were no tax deductions and no additional tax breaks on the secondary home, while they were established on the primary one. Higher property taxes and the absence of tax breaks on the secondary home may have encouraged a strategic behavior whereby many married couples filed for false separation and divorce in order to recover part of property tax rebates.

Age-dependent risk aversion: Re-evaluating fiscal policy impacts of population aging

The existing literature on fiscal unsustainability in the United States often evaluates three alternative policies: increasing the payroll tax rate, reducing pension benefits, and extending the retirement age. Studies suggest that reducing the replacement rate and increasing the retirement age provide higher welfare for future generations. However, these studies often assume constant risk aversion (CRA), which contradicts the empirical evidence that suggests risk aversion tends to increase with age. To provide a more comprehensive understanding of risk aversion, life-cycle behavior, and welfare under uncertainties, this study integrates age-dependent increasing risk aversion (IRA) into an overlapping generations model with risk-sensitive preferences. The quantitative analysis shows that individuals who exhibit IRA tend to adjust hours worked to reduce income risk and accumulate more precautionary savings to ensure future consumption. However, reducing uncertainty consumes resources that could otherwise have been used to increase overall consumption and leisure. Individuals who expect to become more risk averse in old age may prefer an increase in the payroll tax rate over the other two options, as the latter would result in relatively higher uncertainty.

Does Taxing Business Owners Affect Employees? Evidence From A Change in the Top Marginal Tax Rate

Abstract Debates about the taxation of business owners often center on the distributional effects of these taxes, particularly the degree to which they affect workers. Drawing on a new linked owner-firm-worker data set created from U.S. administrative tax records, I analyze how an increase in the top marginal tax rate faced by business owners affected the earnings of their employees. I use panel difference-in-differences methods to compare the earnings of workers in similar firms but whose owners were differentially exposed to the tax increase. I estimate that 11–18 cents per dollar of new business income tax liability was passed through to employee earnings. I find no change in employment in response to the tax increase. The responses were generally associated with lower earnings growth, not changes in workforce composition. The burden was not borne equally by all workers. Essentially all of the workers’ share of the burden was borne by those in the top 30% of the earnings distribution, highlighting that the ultimate distributional effects of the policy depend not only on the share of the burden borne by workers but on the shares borne by different types of workers. Furthermore, since the owners bore the majority of the burden, the policy resulted in a decrease in after-tax earnings inequality between top-bracket owners and lower-bracket workers. I discuss the implications of the findings for the mediating labor market mechanisms and for welfare analyses of income taxation using a marginal value of public funds framework.

Pricing and Coordinating the Lease-Oriented Closed-Loop Supply Chain for Construction Machinery in the Era of Carbon Tax

Promoting sustainable production and consumption practices in the construction machinery industry is crucial for achieving energy savings and reducing carbon emissions. However, there is a lack of targeted studies addressing the challenge of scaling up leasing and recycling while maximizing economic benefits for enterprises. To fill this gap, this paper presents a lease-oriented closed-loop supply chain model that incorporates a carbon tax policy to investigate the impact of the carbon tax rate and consumer preferences for remanufactured products on the supply chain and introduces a leasing compensation–cost apportioning combined contract to achieve supply chain coordination in the construction machinery sector. The model considers differential selling and leasing prices for new and remanufactured products, as well as the recovery rate, under both centralized and decentralized decision-making approaches. The study explores the interrelationships between various parameters through sensitivity analysis and numerical simulation. The results demonstrate that within a certain range of the cost apportioning proportional coefficient and leasing compensation proportional coefficient, the combined contract can lead the supply chain to achieve Pareto optimality. As the carbon tax rate increases, it was observed that the profits for all parties in the supply chain tend to decrease. However, due to the increased demand for remanufactured products, the product recovery rate improves, resulting in a reduction in total carbon emissions in the closed-loop supply chain of construction machinery. Moreover, the profits of all parties and the total supply chain profits initially decrease and then increase with an increasing preference coefficient for remanufactured products among consumers. By leveraging these factors and adopting effective strategies, such as enhancing consumer recognition of remanufactured products and optimizing pricing and cost allocation, it is indeed possible for the profits of all parties and the total profits in the supply chain to surpass the initial values, even in the face of increasing carbon tax rates. This demonstrates the potential for aligning sustainability objectives with economic benefits in the construction machinery industry.

The end of bank secrecy: implications for redistribution and optimal taxation

AbstractThis paper argues that the ability to enforce taxes on offshore income may shape the redistributional properties of the tax system through two channels. First, it mechanically raises tax progressivity for given parameters of the tax system because high-income taxpayers own most of the offshore wealth. In the US, recent comprehensive reporting by offshore banks suggests the mechanical increase in average tax rates may be around 1.5 percentage points for the top 0.01 per cent and virtually zero below the top 1 per cent. Second, it may further raise tax progressivity by changing the trade-offs underlying optimal taxation in favour of higher taxation of top incomes.

The Influence of Environmental Protection Tax Law on Urban Land Green Use Efficiency in China: The Nonlinear Moderating Effect of Tax Rate Increase

Due to the basic carrier function of land, the economic and ecological effects of Environmental Protection Tax Law (EPTL) will be reflected in the land use. Therefore, this article investigates the effect of EPTL on land green use efficiency (LGUE). To be specific, based on the panel data of 278 prefecture-level cities in China from 2012 to 2020, LGUE is evaluated through a global super efficiency epsilon-based measure (EBM) with unexpected output. Then, the reform of “sewage fee-to-tax” is regarded as a natural experiment to accurately evaluate the effect of EPTL on LGUE. The result that the implementation of EPTL significantly drives LGUE is confirmed. The mechanism tests show that the implementation of EPTL enhances the intensity of green innovation, promotes the optimization of industrial structure, and thereby improves LGUE. Moreover, we find that the moderating effect of tax rate increase is nonlinear and exhibits an inverted U-shape. That is, below a certain value, the tax rate increase will strengthen the EPTL’s ability to improve LGUE. However, after exceeding the value, the tax rate increase will weaken the EPTL’s ability to improve LGUE. Targeted suggestions are proposed for improving the environmental protection tax system and LGUE.

Not all luck is created equal: Sources of income inequality and willingness to redistribute

Despite steadily rising inequality in the US over the last few decades, demand for increasing tax rates and redistribution has not increased. A growing literature argues that one reason for this is that people might perceive inequality to be fair. This literature has documented that Americans tend to perceive economic inequality stemming from merit as being fair and inequality stemming from luck as unfair. However, “lucky breaks” in the real world do not necessarily come from a lottery or random chance but from the actions of the government favoring a “lucky” few. People might be more willing to redistribute if it compensates those negatively affected by government action. Using an online experiment we show that luck stemming from the action of a government-like actor influences individuals’ desire to redistribute earnings making them more likely to favor redistribution than in instances where inequality is caused by merit or by random luck.