Tax Threshold Research Articles

Ograniczenia budżetowe gospodarstw domowych w Polsce – analiza z wykorzystaniem EUROMOD-u

The following important changes affecting Polish households’ disposable income were introduced in 2022: the personal income tax (PIT) threshold was increased and its rate lowered, the tax exempt amount was raised, the possibility of deducting health insurance contributions from PIT was abolished, and the rules for granting housing allowance were modified. The aim of the research discussed in the paper was to determine the total direct impact of the above-mentioned changes on the amount of disposable income of a single parent and an individual managing a one-person household. The research was based on the EUROMOD tax-benefit microsimulation model and the hypothetical household method. A comparison of the budget constraints of July 2021 and July 2022 shows a decrease in real disposable income among low-skilled part-time workers or those working part of the year. It was found that the changes introduced in the area of housing allowance eligibility may have negatively affected the income of individuals living in one-person households receiving wages of less than 40% of the average salary. The lack of indexation of benefits is also observed to have had a negative impact on single parents’ income.

Tax thresholds yield multiple optimal cooperation levels in the spatial public goods game

Tax thresholds yield multiple optimal cooperation levels in the spatial public goods game

Techno-economic comparison of ammonia production processes under various carbon tax scenarios for the economic transition from grey to blue ammonia

Ammonia synthesis is a carbon-intensive process, with significant volumes of carbon dioxide produced during the preliminary production of hydrogen from a fossil fuel feedstock. Since carbon emissions vary significantly depending on the hydrogen production method, the impact of carbon capture and storage (CCS) implementation on the overall economic performance of the ammonia synthesis process differs. Therefore, it is crucial to (1) integrate cost-effective CCS into various ammonia synthesis processes and (2) conduct a comprehensive comparison of grey and blue ammonia systems together, considering the economic costs of the carbon emissions. This study aims to investigate the economic feasibility of large-scale ammonia processes under various carbon tax scenarios and suggest carbon-efficient options for the ammonia industry. Three ammonia synthesis processes are designed that differ in their hydrogen production method – steam methane reforming (SMR), autothermal reforming (ATR), and hybrid SMR-ATR – and these three options also have grey ammonia and blue ammonia production versions. The grey ammonia production systems do not include a carbon capture procedure, while the blue ammonia systems ensure that the CO2 emissions are below 0.065 t CO2/t NH3. In the present study, both the grey and blue versions of the three ammonia production processes are subjected to techno-economic evaluation under various carbon tax scenarios. For the grey ammonia systems, economic feasibility varies depending on the carbon tax scenario under consideration. Grey ATR becomes the most cost-effective option within a carbon tax of 95 $/ton to 115 $/ton. In contrast, the economic viability of the blue ammonia systems is unaffected by the carbon tax policy environment. In particular, blue ATR exhibits 6% and 14% lower levelized cost of ammonia (LCOA) compared to the blue SMR and blue Hybrid SMR-ATR, respectively. Overall, the results indicate that, below a carbon tax threshold of 62 $/ton, the SMR process without carbon capture is economically favorable. However, for carbon tax above 62 $/ton, the ATR process with carbon capture has greater economic feasibility than other options. A minimum carbon tax of 62 $/ton is required to promote the transition to blue ammonia. These findings thus provide valuable insight into the establishment of effective carbon regulations in response to the global demand to tackle the climate crisis.

Optimal sizing and feasibility analysis of second-life battery energy storage systems for community microgrids considering carbon reduction

The rapid development of distributed renewable energy has made energy storage essential for efficient operation. However, energy storage is challenging for prosumers due to high investment costs and long payback periods. The second use of batteries has been evaluated as an alternative energy storage after the first service in electric vehicles with the remaining 80% capacity. This study investigates the feasibility of using secondary-use batteries as shared storage for prosumers. Financial and technical break-even points regarding the gradually increasing carbon limit on the way to 100% renewable have been determined. The proposed method's performance has been verified by conducting sensitivity analyses regarding various environmental and economic characteristics. The self-consumption rates have been achieved by 65.9% in Spain (Madrid) and 49.9% in England (London), and 48.5% in Türkiye (Antalya) without incentive. Increasing the carbon tax by 1 $/t for high and low energy tariffs can reduce carbon emissions by 181.3 and 1607 kg/yr. The optimum sizes remain until the carbon tax threshold is 60 $/tCO2eq for high energy tariffs. After 60 $/tCO2eq, it is tended to enlarge the hybrid power system. However, severe carbon emission restriction for zero carbon targets prevents the optimum system design since the carbon reduction cost increases to 232.7–304.8 $/kg. This study encourages investors and prosumers to plan the shared energy storage system sensibly and guides governments to develop realistic incentive mechanisms to implement second-life batteries effectively.

The taxation of employment income in African countries: Findings from a new dataset

AbstractThis study presents new evidence on the taxation of employment income in African countries. Utilising a unique dataset, we summarise trends in the policy design of personal income taxes and other mandatory contributions between 1995 and 2020. We analyse tax rates, thresholds and reform patterns, before comparing cross‐country effective tax rates and the progressivity of employment income taxes. We find that, inter alia, reform is infrequent, top marginal tax rates are lower than in the OECD and in 25% of African countries, an individual earning a wage equal to the PPP$1.90/day poverty line would be liable to pay income tax.

Corporate Control and Exceptions to Minimum Corporate Taxation: A Step Toward Fairness or Financialisation?

Abstract The European Commission is currently seeking to implement the OECD/G20 agreement on minimum corporate taxation, in view to ensuring a minimum effective tax rate on large multinational corporate groups and protecting the level playing field for business and society. In fact, the proposed ruling introduces scope exceptions for groups directly or indirectly controlled by governmental entities, non-profit organisations, and investment and pension funds. These scope exceptions may provide incentives for controlling parties to restructure the corporate group in view to avoid taxation, if the minimum effective tax threshold is constraining and material. Furthermore, it may provide a tax competitive advantage for groups controlled by those parties.

Wzmocnienie konstytucyjnej zasady władztwa daninowego gminy jako alternatywa zbilansowania dochodów gmin w związku z obniżeniem PIT

The aim of the paper is to find legal-tax solutions, which have potential to compensate in fiscal way an expected lowering of municipalities’ revenues from their share in personal income tax as the result of lowering this tax by legislative authority. That opportunity author ascribe to increasing of RET’s tax rates and at the same time implementation of degressive tax thresholds in RET. That legal arrangement will balance raising the RET for taxpayers who already pay high amount of RET and empower fiscal sovereignty of municipalities deduced form Article 168 of The Constitution of the Republic of Poland.

Using residual heat maps to visualise Benford’s multi-digit law

It has been known for more than a century that, counter to one’s intuition, the frequency of occurrence of the first significant digit in a very large number of numerical data sets is nonuniformly distributed. This result is encapsulated in Benford’s law, which states that the first (and higher) digits follow a logarithmic distribution. An interesting consequence of the counter intuitive nature of Benford’s law is that manipulation of data sets can lead to a change in compliance with the expected distribution—an insight that is exploited in forensic accountancy and financial fraud. In this investigation we have applied a Benford analysis to the distribution of price paid data for house prices in England and Wales pre and post-2014. A residual heat map analysis offers a visually attractive method for identifying interesting features, and two distinct patterns of human intervention are identified: (i) selling property at values just beneath a tax threshold, and (ii) psychological pricing, with a particular bias for the final digit to be 0 or 5. There was a change in legislation in 2014 to soften tax thresholds, and the influence of this change on house price paid data was clearly evident.

ЙИРИК СОЛИҚ ТЎЛОВЧИЛАРНИНГ СОЛИҚ МАЪМУРИЯТЧИЛИГИНИ ТАКОМИЛЛАШТИРИШ ЙЎЛЛАРИ

ThisarticledescribesthestagesofimprovingtaxadministrationintheRepublicofUzbekistan,inparticular,reformstodeterminethecriteriaforinclusioninthecategoryoflargetaxpayers.Scientificapproachestofiscalreformsthatcontributetothedevelopmentofeconomicentitiesinthecountryareproposed.Theaimofthestudyistodevelopproposalsandrecommendationsaimedatimprovingthetaxadministrationoflargetaxpayers.Scientific novelty of the research:1. The necessity of simultaneous implementation of reforms aimed at creating equal conditions for all business entities while improving tax administration in the Republic of Uzbekistan has been scientifically substantiated.2. The expediency of determining the criteria for the inclusion of legal entities in the category of large taxpayers on the basis of international experience and practice has been proved.3. The need to change the threshold value for taxpayers in a simplified and generalized form in order to improve the efficiency of tax administration is scientifically substantiated, together with the tax administration of large taxpayers in the country.Keywords.Large taxpayers, fiscal policy, tax administration, budget revenues, value added tax, income tax, tax thresholds

Limiting the distortionary effects of transaction taxes: Scottish stamp duty after the Mirrlees Review

AbstractWe investigate the distortionary effects of transaction taxes through a case study of the Scottish residential property market. We make use of four sources of variation in transaction tax rates present in recent Scottish tax systems: (1) jumps in tax liabilities at tax thresholds; (2) jumps in marginal tax rates at thresholds; (3) a tax announcement that created temporary tax saving opportunities; and (4) a shift to a more progressive transaction tax regime. Our results indicate that market participants are highly responsive to tax changes and are willing to change the price and timing of transactions when tax savings opportunities are present. We also find that progressive reform had a significant positive effect on transaction activity in the market segment where tax rates were reduced. However, the higher end of the market, where tax rates increased, was mostly unaffected by progressive reform, with the exception of the market for very expensive properties, where a negative effect is identified. Implications of our findings are that if governments want to make transaction tax regimes more efficient, progressive taxation might be a good way to limit distortionary effects, whilst also encouraging transaction activity in the lower end of the market.

Impacts of Two Tax Reforms on Inequality and Welfare in China

AbstractThis paper takes stock of the existing literature on taxation and presents a framework to evaluate the impacts of tax policy reforms from the perspectives of progressivity and social welfare. It applies this framework to examine two tax reforms in China and finds that (i) the abolition of the regressive agricultural tax in 2005 has significantly improved the social welfare of rural residents; (ii) the increase in the income tax thresholds in 2011 increased progressivity but reduced the overall income tax share of total taxation. When the majority of the taxpayers are in the lower tax bracket, progressivity has little real impact in improving income distribution.

Elasticities of taxable income and adjustment costs: bunching evidence from New Zealand

Abstract This article obtains elasticity of taxable income (ETI) estimates using data for NZ over the period, 2001–2017, and using the connection between the ETI and excess bunching at income tax thresholds. Results are reported for the top two thresholds in the tax schedule and for various taxpayer types. Adjustments to tax changes are investigated by comparing ETIs obtained from persistent bunching at thresholds when the tax regime is unchanged, with transitory values associated with specific tax reforms. Results suggest substantial bunching around both tax kinks, with ETIs of around 0.2–0.3 across all taxpayers. Evidence suggests large responses by the self-employed, with ETIs of around 0.8–1.0. No significant differences between males and females were found. Adjustment costs and/or inattention biases associated with a shift in a tax threshold were equivalent initially to around 18% (declining to 6%) of the observed excess mass at the post-reform threshold.

Land value-added tax planning of Real estate development enterprises

This paper takes the real estate development enterprise as the research object, based on the characteristics of land VALUE-ADDED tax, carries out tax planning on the land value-added tax of the real estate development enterprise from four aspects, including the deduction of interest expense, reasonable pricing, collection cost and whether to combine the real estate with different value-added rates. The conclusion shows that the real estate development enterprises can calculate the tax threshold and choose different tax payment schemes to reduce the tax burden.

Dividend Tax Thresholds and Extreme Bunching∗

Dividend Tax Thresholds and Extreme Bunching∗

Financial Frictions and the Non-Distortionary Effects of Delayed Taxation

Financially constrained agents discount future cash flows at above-market rates. In this paper, we present the hypothesis that delaying tax payments can materially reduce distortions when agents are credit constrained. We test this hypothesis in the context of the labor supply decisions of young workers in Norway, where a kinked income-contingent student-debt conversion scheme replicates an income tax with delayed payments. Bunching analyses reveal elasticities that are an order of magnitude below those we find at a regular income tax threshold, and which are increasing in ex-ante financial resources. These findings underline the potential for delayed taxation to be a powerful new component of optimal tax policy.

Modeling the Economic Effect of Statutory Taxation on Gaming Hospitality

This article shows that casino taxation may be welfare enhancing for gaming hospitality resorts due to their market power to export local taxes to tourist customers. The price-inelastic tourism demand for casino gambling plays an important role in such power of tax exportation. We use a mathematical programming model to derive a tax threshold, through which a specific tax can be identified to be good or bad for efficiency. The policy implication is that a high tax should be imposed if enough of the tax burden can be shifted to tourists, but a low tax must be offered otherwise. These results are shown to be useful in practice across travel destinations.

Frictions and taxpayer responses: evidence from bunching at personal tax thresholds

We exploit kinks and notches in the UK personal tax schedule over a 40-year period to investigate how taxpayers respond to income tax and social security contributions. At kinks, where the marginal rate rises, we find bunching by company owner-managers and the self-employed, but not those with only employment income. Responses to notches, where the average rate rises, provide compelling evidence that this is because most employees face substantial frictions: fewer than a quarter bunch even where doing so would increase both consumption and leisure. We develop a new approach for identifying selection in who responds and for decomposing responses into hours and wage components. We find that those employees who do bunch at notches are almost exclusively part-time workers, but tend to have lower wages and work more hours than those part-time workers who do not bunch.

Some Taxes Are Better Than Others: An Economic Experiment Analyzing Groundwater Management in a Spatially Explicit Aquifer

AbstractThis paper develops a coupled hydrologic‐economic model that estimates the effects of six tax institutions that theory predicts will lead to equal amounts of aquifer withdrawal. That said, the distributive effects of the tax institutions are expected to differ because each involves different combinations of tax thresholds and side payments (returned tax revenue). The tax policies can lead to groundwater users being worse off than they would be using an unmanaged aquifer. This study explores whether the distributive impacts of specific policies that have equal marginal incentives lead to differences in the behavior of participants in an experiment involving a common pool groundwater resource. The results reveal that each of the tax policies results in approximately the same reduction in resource use but affects participants' earnings and opinions regarding the policies differently. A tax imposed on groundwater use above a threshold and without a side payment is most effective in increasing the net social benefit associated with using the aquifer; participant earnings under that scheme are almost equal to earnings from an unmanaged aquifer (1.04% less), and overall social efficiency is greater (4.34%). Unfortunately, participants tend to prefer an unmanaged aquifer and tax policies with high side‐payments—treatments that led to lower overall social efficiency. The evidence suggests that aquifer management may require a two‐fold approach: (1) a carefully selected threshold that can make water users financially indifferent between a managed and unmanaged aquifer and (2) education to increase the political acceptability of the managed aquifer policy.

INTERVIEW WITH BILL MILLER ON THE EVOLVING LANDSCAPE OF GAMBLING IN THE UNITED STATES

INTERVIEW WITH BILL MILLER ON THE EVOLVING LANDSCAPE OF GAMBLING IN THE UNITED STATES

Do Payroll Tax Cuts for Australian Firms Affect Their Use of Capital and Labor?

This paper studies the effects of increases in payroll tax thresholds on wages, employment and capital expenditure in Australia. We use data from the Business Longitudinal Analysis Data Environment (BLADE) and employ a difference-in-differences approach to determine the effect of state-level changes in payroll tax thresholds. Our findings indicate that the effects of numerous increases in state-level payroll tax thresholds between 2006 and 2015, which reduced tax rates from around six to zero percent for small businesses, were insignificant. Our estimates provide no evidence in favor of the hypothesis that a lower payroll tax burden increases wages, employment or capital expenditure. Our results are robust with regards to a range of Placebo tests and sample restrictions.