Increase In Tax Rate Research Articles

Does land conservation raise property taxes? Evidence from New England cities and towns

Protected lands provide high ecological and social value, yet a perception that land protection erodes local property tax bases and shifts tax burdens to other owners creates barriers for new protection. We investigate the impact of land protection on local property tax rates using panel data from more than 1400 towns and cities in New England between 1990 and 2015, including both ownership and easement-based protection. We find that on average, new protection results in a small increase in annual tax rates, with an expected change of $0.0231 per $1000 of value for a 1 percentage point increase in the percent of municipal area protected. This corresponds to an increase in a homeowner's annual property tax bill of $1.16 per $100,000 of value for 100 acres of new land protection. We do not find that taxes continue to increase over time or reduce municipal expenditures. However, for towns that are growing slowly, have lower household incomes, or use municipal land protection, we estimate greater tax bill increases of up to $10 for each $100,000 of value. These results provide evidence that land protection does not have a substantial impact on property taxes, but also highlight the importance of maintaining and expanding public compensation mechanisms, such as payments in lieu of taxes, where expected burdens from new protection may be greater.

Tax Policy, Corruption and Poverty in WAEMU

The aim of this paper is to demonstrate that a tax policy designed for taxes for social purposes reduces poverty in the West African Economic and Monetary Union. Poverty reduction requires optimal taxation, reduction of corruption, and improvement of the final consumption level per inhabitant. In order to reach this conclusion, we used panel data from the period 1996 to 2019. We used a method based on ‘panel-corrected standard errors corrected’ (PCSE). The paper suggests that public officials should establish proper tax policies and effective social protection programmes, and ensure good tax governance. Mainly, authorities can establish tax exemption thresholds for the poor, increase tax rates on the highest incomes, and ensure good tax governance.

The macroeconomic effects of basic income funded by a land-holding tax in Korea

We examine the macroeconomic effects of the introduction of a scheme to pay a basic income of approximately $900 per year to each citizen through a land-holding tax. Unlike other studies, we address the issue of whether a sharp increase in the land-holding tax rate intended to raise funds for a basic income scheme causes landowners to sell their land. We also use the relationship between holding assets and reservation wages to determine whether household members supply their labor in accordance with the payment of basic income. Our simulation results obtained using data for Korea show that the introduction of the basic income scheme decreases real gross domestic product, total labor demand, and social welfare by 1.3%, 0.3%, and 0.4%, respectively.

Royalty Tax Rate and the Under-reporting Dilemma in Tanzania’s Mining Sector

The paper investigates whether an increase in royalty tax rates reduces or eliminates under-reporting by firms in Tanzania’s mining sector. It uses a theoretical approach to dynamic optimisation techniques. The findings suggest that an increase in the royalty tax rate does not necessarily lower the possibility of under-reporting. Our approach is to look at the royalty tax that is levied based on the gross value. Its impact on the firm’s extraction behaviour depends mostly on the prices of minerals. More importantly, the price movements counteract the impact of a given royalty tax. We also suggest that when a country wishes to reduce or eliminate under-reporting practices, it should strengthen the regulatory body that oversees the operations of firms in the sector.

Simulating Tax Effects on Economic Activities in Sierra Leone: A DSGE Framework

"In order to analyse the macroeconomic effects of changes in the marginal tax rate on cyclical fluctuations in Sierra Leone, we created a DSGE model that evaluates the macroeconomic impact of three tax instruments (i.e., consumption, income, and capital). The model is calibrated with parameter values that reflect the peculiarities and representative tax structure of the Sierra Leone economy. We found that; a 5% increase in consumption tax rate causes a distortionary effect on output, consumption, and investment (in the short-run), while in the long-run output contract by 3.1%, with a permanent decline in consumption and investment. Whilst, fiscal revenues increase in the dynamic short run, 15%, higher than it previous steady-state value. On the other hand, a simulation of a 5% reduction in consumption tax, labour income tax, and capital income tax from the current rates shows a positive impact on consumption and investment as such output grows permanently by 8.45%, but fiscal revenues decrease marginally by 1.7%. The key point in the analysis is that in Sierra Leone tax changes have distortionary effects on the decisions of individuals and firms, affecting output, investment, consumption, and fiscal revenues. As such tax policy can alter economic behaviour in profound ways. We observed that fluctuations in tax rates produce large substitution effects that alter investment & consumption decisions and have distortionary effect on the behaviour of economic agents. The results suggest that the authorities should synchronize policies to manage the trade-off between the desire for more welfare gains, output growth, and the need for more fiscal revenue mobilization."

Relationship between total tax and contribution rate and ease of doing business score for India, China and USA during 2014-2019

The Purpose of the study was to analyse the impact of Total Tax contribution rate (% of profit) on the Ease of doing Business score in case of the three countries, i.e., India, China, and the USA for the time period of 6 years (2014-2019). The data for the study was collected through the World Bank website. Study was conducted with the help of various graphs, depicting the data and through various excel tools like correlation and regression. The correlation between the two variables is also seen as negative, implying that Total tax and contribution rate (% of profit) does have some effect on the score. It implies that as the Total tax and contribution rate (% of profit) increases, the Ease of Doing Business Score for the countries decreases, and vice-versa. Regression analysis of the data taken has also shown that Total tax and contribution rate (% of profit) in the 3 countries over the 6 year period is explaining only 47% (approximately) change in the Ease of Doing Business Score for the countries. This result is in line with the calculation of the Ease of doing Business Score as there are 10 other parameters that affect the score.

Tax rate hike risks 'slicing off' access to new medicines for UK patients

Government proposals to increase tax rates applied to drug manufacturers are a “Damocles sword” over the UK life sciences sector, the Association of the British Pharmaceutical Industry (ABPI) has warned. In December 2022, the government launched a consultation on proposals to increase the payment percentage required from manufacturers under the statutory tax scheme for branded […]

ОСОБЛИВОСТІ БЮДЖЕТНО-ПОДАТКОВОЇ ПОЛІТИКИ В КОНТЕКСТІ ГЛОБАЛІЗАЦІЙНИХ ПРОЦЕСІВ

Current issues of defining the types and principles of budget and tax policy in the conditions of globalization processes during the period of martial law are studied. The necessity of fiscal, regulatory, and stimulating functions of the high level of the organization's fiscal, regulatory, and stimulatory functions was established by the budget and tax policy, ensuring at the same time the economic capacity of the state to perform the functions assigned to it, and the regulation of economic processes in the state and the direction of the development of the economic system. The dependence of the application of types of budget and tax policy on the conditions of the country's economic system and the goals set for the government, which makes decisions in the conditions of modern globalization processes, is determined. It is argued that the peculiarities of the budget and tax policy in the context of globalization processes lead to the need to find new ways to respond to modern challenges, implement measures to equalize and mitigate negative consequences and ensure economic recovery. A comprehensive and coordinated approach to the constant vector of recovery in war conditions and prompt response to the current economic situation through the application of optimal taxation conditions and high-quality administration of the budget and tax policy is analyzed. Scientific approaches in the context of globalization processes are summarized, which made it possible to clarify the interpretation of the types of the concept of "budget and tax policy" and to determine the principles of purposeful state activity using the tax and budget systems to implement specific directions of their use exclusively in the interests of citizens, society and the state. The main feature of the formation of budget and tax policy in the context of globalization processes is the tendency to reorient the priorities of state finances to ensure the conduct of armed struggle on the scale that the physical resources of the country allow. Tax revenues for such purposes, even allowing for increased tax rates and broadening of the tax base, are not sufficient to cover wartime needs. The characteristics of the principles of budget and tax policy aimed at ensuring support of macroeconomic stability and the production of non-inflationary GDP by changing approaches to budget formation and diversifying sources of budget and tax policy have been confirmed. Features of the emergence of new trends in the functioning of the budget and tax policy in the context of globalization processes are related to changes in the macroeconomic environment and have a direct impact on the country's financial policy.

The effect of cigarette and e-cigarette taxes on prescriptions for smoking cessation medications.

To test the effect of cigarette and e-cigarette taxes on prescriptions for smoking cessation medications. Symphony Health, IDV all-payer prescription claims data for the United States over the period 2009-2017. Prescription fills for smoking cessation products were provided at the patient's age, patient's sex, brand/generic, payment type, year, and quarter levels. We study the effect of state-level cigarette and e-cigarette tax rates on prescriptions for smoking cessation medications using two-way fixed effect modified difference-in-differences regressions. We also use a multiperiod difference-in-differences estimator robust to bias from dynamic and heterogeneous treatment effects with a staggered policy rollout. We use fills for Chantix, Zyban, and their generics, as well as Food and Drug Administration-approved nicotine replacement therapies that are paid for by insurance. We observe no statistically significant change in prescription fills following an increase in the e-cigarette tax rate, though we are unable to rule out potentially large effects. However, following a $1.00 increase in the cigarette tax rate, we observe a 1052 increase in prescription fills per 100,000 adults (95% CI: 57, 2046; 4.2% increase). The effect of cigarette taxes on prescription fills was particularly large for 18-34 year-olds. Our findings suggest that, during a period when e-cigarettes are widely available, cigarette tax increases remain effective in increasing use of these medications, but e-cigarette taxes do not increase use of these medications.

Environmental Taxation Assessment on Clean Technologies Reducing Carbon Emissions Cost-Effectively

Anthropogenic emissions increase the concentration of greenhouse gases, including carbon dioxide, which necessitates the promotion of environmental protection as one of the most urgent tasks of European environmental policy. The reduction of greenhouse gas emissions and the development of clean technologies in production also depends on the impact of environmental taxation; in this regard, a methodology for analyzing its impact and assessment on the development of eco-friendly technologies is proposed. An analysis of environmental tax revenues to the budgets of the EU countries revealed the insufficiency of environmental revenues to cover the costs of environmental protection from the damage caused by greenhouse gas emissions, which requires the transformation of the system of fiscal mechanisms. The total receipts of all environmental taxes in the EU budget for the period 2000–2020 increased by 53%, and the receipts from taxes on greenhouse gas emissions into the atmosphere increased by 71% in the EU budget, with a tax rate increase of 1.5-fold over this period. The application of the proposed methodology made it possible to determine, on the basis of the correlation coefficient, a high connection strength of +0.971 for the period 2000–2020 between the receipts of the environmental tax for greenhouse gas emissions into the atmosphere and the total values of all environmental taxes, as well as a fairly strong feedback of +0.913 from the receipts of the environmental tax to the EU budget with gross domestic product. Therefore, it is proposed to use differentiated environmental tax rates for different stages of the development of clean technologies.

Effect of CO2 tax on energy use in oil production: waterflooding optimization under different emission costs

Tackling emissions from hydrocarbon production is a necessity because hydrocarbon production will last for a prolonged time. As a popular hydrocarbon production method, waterflooding operation is energy-intensive and accounts for significant CO2 emissions. This article investigates the effect of CO2 tax level on recovery process of already producing fields with waterflooding. Our methodology is waterflooding optimization in reservoir simulation models, specifically optimizing well-controls. Unlike traditional studies, our optimization objective comprises two components: the profitability of hydrocarbon production and an additional tax proportional to CO2 emissions. The associated CO2 emissions is estimated using a scheme developed upon an integrated model of reservoir, surface network, and topside facility. We examine our methodology on two cases with heterogeneous reservoir models. In each case, we optimize multi-scenarios enforcing different CO2 tax rates. The solutions indicate that imposing a higher CO2 tax rate reduces both emissions and hydrocarbon production. The fractional reduction of oil produced is however smaller than the emission reduction. While an increased tax rate drives the topside equipment to operate at higher efficiencies, the main effects of a higher tax rate are reduced water injection and more efficient subsurface drainage. There is a non-linear relationship between the reduced production and emissions. For increasing tax levels there are diminishing returns on lower emissions, reflecting reduced opportunities for emission reduction by changes in the drainage strategy. Some increments on the tax rate will therefore have negligible impacts on the optimal drainage strategy, and hence an adverse effect on the profitability with negligible emission reduction.

Environmental and welfare effects of vehicle purchase tax: Evidence from China

We investigate how an increase in the rate of purchase tax for internal combustion engine vehicles (ICEVs) in China affects sales of ICEVs and battery electric vehicles (BEVs), environmental externalities of CO2 and PM2.5 emissions and social welfare. By building a random-coefficients discrete choice model based on the brand-level sales data and conducting counterfactual analyses, we find that, first, the own-price elasticity of market shares of ICEVs and BEVs are −3.07 and −2.93, respectively. Second, the increase in purchase tax rate by 2.5% for ICEVs with a displacement no higher than 1.6 L in 2017 has reduced the environmental externalities caused by CO2 and PM2.5 emissions. Third, the welfare effect depends crucially on the definition of social welfare and the assumptions about vehicle lifetime and manufacturers' pricing decisions. Finally, several policy implications are discussed.

Are tax and expenditure limitations constraining institutions or institutionally irrelevant? Evidence from Minnesota

AbstractState‐imposed limitations on local government taxation and expenditures (TELs) are a common part of American federalism. But the consequences of TELs are the subject of debate. Are TELs institutional constraints that harm local governments? Or are TELs institutionally irrelevant veils easily pierced by political actors? This research uses the removal of an assessment restriction in Minnesota to evaluate the effect of TELs on the financial health of local governments. It finds that TEL removal had no effect on the financial health of Minnesota cities. Additional tests demonstrate that the results are not driven by a lack of bindingness in the TEL, by increases in property tax rates, or by new non‐property tax revenue. It concludes that TELs are closer to institutionally irrelevant than to meaningful constraints.

Public redistributive policies in general equilibrium: An application to Greece

We develop a general equilibrium OLG model of a small open economy to quantify the aggregate and distributional implications of a wide menu of public redistributive policies in a unified context. Inequality is driven by unequal parental conditions in financial and human capital. The model is calibrated and solved using fiscal data from Greece. Our aim is to search for public policies, targeted and non-targeted, that can reduce income inequality without damaging the macroeconomy and without worsening the public finances. Pareto-improving reforms that also reduce inequality include an increase in public education spending provided to all and an increase in the inheritance tax rate on financial wealth. At the other end, we identify reforms that may reduce inequality but make everybody worse off. Regarding cases in between, a switch to a fully funded public pension system is good for everybody although it is the rich-born that benefit more by moving to a more efficient macroeconomy.

A proprietary component manufacturer’s global supply chain design: The impacts of tax and organizational structure

This paper studies the supply chain structure design for a proprietary component manufacturer (PCM) in a global environment. The PCM, producing component with patent protection and/or superior quality, chooses to enter into an overseas market to enhance revenue. There are three supply chain structures available to the PCM: (1) monopoly where the PCM establishes a downstream manufacturing subsidiary to produce and sell the end product, (2) component supplier where the PCM supplies component to a local original equipment manufacturer (OEM), and (3) dual distributor where the PCM supplies component to the OEM but also produces a competing end product. Our analysis suggests that two important features in a global environment, i.e., the global tax disparity and the organizational structure, have significant impacts on the PCM’s supply chain structure design and profits. If the downstream has a tax advantage, it is optimal for the PCM to directly enter into the downstream market with the structure of monopoly. As the downstream tax rate increases, the other two structures, i.e., component supplier and dual distributor, become more attractive. We show that centralization makes the dual distributor and monopoly structures more desirable. However, the OEM may be driven out of the market and the dual distributor structure is infeasible when the downstream tax rate is high enough. Contrary to our traditional wisdom, decentralization may benefit the PCM under certain circumstances.

Does government reduction of the corporate income tax rate increase employment? Evidence from China

Using 2.21 million pieces of data from the National Bureau of Statistics of China's Industrial Enterprises Database, compiled during 1998–2013, we apply a static panel model and a dynamic panel model to build upon previous research by more accurately examining the impact of changes in corporate income tax rate on employment. The endogeneity problem is solved by using a variable set. The empirical results show that reducing the corporate income tax rate can increase the overall employment by affecting employee wages, enterprise debt-to-asset ratio, and enterprise return on assets. Moreover, tax reduction can increase the employment of private and collective enterprises, but it has no significant impact on the employment of state-owned enterprises. Conversely, it can inhibit the employment of foreign, Hong Kong, Macau, and Taiwan enterprises.

Do higher income taxes on top earners trickle down? A local labor markets approach

This paper measures how much higher income taxes on U.S. top 1% earners “trickle down” and reduce other workers’ wages via geographically concentrated spillovers. Using an exposure design that combines time-series variation in the federal marginal tax rate for top 1% earners with cross-sectional variation in the top 1% income share across local labor markets, I find very little evidence of local trickle-down effects. The point estimates imply zero local trickle-down effects. At conventional levels of confidence, the estimates are statistically inconsistent with a one percentage point increase in the top tax rate reducing worker wages by more than −0.08%. These results undermine claims that trickle-down effects should be an important consideration in setting top tax rates.

Increasing inequality and voting for basic income: Could gender inequality worsen?

This paper examines the link between political support for basic income funded by linear income taxation and income inequality by household and gender. We develop a model with an increasingly right-skewed distribution of skill across households and a gender wage gap within households. Household preference for basic income decreases as skill level increases and female labour supply decreases with time spent rearing children. Majority voting supports the basic income scheme as mean relative to median household skill increases. Household fertility and skill level are inversely related under the scheme. An increase in the marginal tax rate to fund required government revenue could exacerbate gender inequality by reducing female labour supply. Quantitative illustrations suggest that the recent peak in the mean to median wage gap would provide voting support for basic income from the majority of households in the United States. Basic income of $12,000 conditional on below-median wages would increase government spending by 10.8% which, if funded by progressive income taxation, could reduce the adverse effects on gender inequality.

Bunching estimation of elasticities using Stata

Typical censoring models have mass points at the upper or lower tails, or at both tails, of an otherwise continuous outcome distribution. In contrast, we consider a censoring model with a mass point in the interior of the outcome distribution. We refer to this mass point as “bunching” and use it to estimate model parameters. For example, economic theory suggests that, for increasing marginal income tax rates, many taxpayers will report income exactly at the threshold where the tax rate increases. This translates into a censoring model with bunching at the threshold. The size of this mass point of taxpayers can be used to estimate an elasticity parameter that summarizes taxpayers’ responses to taxes. In this article, we introduce the command bunching, which implements new nonparametric and semiparametric identification methods for estimating elasticities developed by Bertanha, McCallum, and Seegert (2021, Technical Report 2021-002, Board of Governors of the Federal Reserve System). These methods rely on weaker assumptions than what are currently made in the literature and result in meaningfully different estimates of the elasticity.

RETRACTED BY THE AUTHORS: Dividend Taxes and the Allocation of Capital

This paper investigates the 2013 threefold increase in the French dividend tax rate. Using administrative data covering the universe of firms from 2008 to 2017 and a quasi-experimental setting, we find that firms swiftly cut dividend payments and used this tax-induced increase in liquidity to invest more. Heterogeneity analyses show that firms with high demand and returns on capital responded most while no group of firms cut their investment. Our results reject models in which higher dividend taxes increase the cost of capital and show that the tax-induced increase in liquidity relaxes credit constraints, which can reduce capital misallocation. (JEL D22, G31, G35, H25, H32)