The Costs of Taxation in the Presence of Inequality PDF Download
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Author: Åsmund Sunde Valseth
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper provides a new and improved measure of the marginal cost of public funds (MCF). It is based on a benchmark tax which is distributionally neutral and non-distortive. This is in contrast to the MCF-measure used in the previous literature, that has used the regressive uniform lump-sum tax as the benchmark. Our proposed MCF-measure more precisely accounts for the distributional aspects of public funding (the tax scheme) and makes a clear distinction between this and the distributional aspects of the public good considered. Compared to the previous literature, we find a higher MCF both in the case of a uniform lump-sum tax and in the case of distortive taxes. Due to its regressive distributional consequences, we find that the MCF of a uniform lump-sum tax is always greater than one when not combined with distortive taxes. Moreover, we find that the MCF could be greater than one also with an optimal combination of a uniform lump-sum tax and distortive taxes.
Author: Åsmund Sunde Valseth
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper provides a new and improved measure of the marginal cost of public funds (MCF). It is based on a benchmark tax which is distributionally neutral and non-distortive. This is in contrast to the MCF-measure used in the previous literature, that has used the regressive uniform lump-sum tax as the benchmark. Our proposed MCF-measure more precisely accounts for the distributional aspects of public funding (the tax scheme) and makes a clear distinction between this and the distributional aspects of the public good considered. Compared to the previous literature, we find a higher MCF both in the case of a uniform lump-sum tax and in the case of distortive taxes. Due to its regressive distributional consequences, we find that the MCF of a uniform lump-sum tax is always greater than one when not combined with distortive taxes. Moreover, we find that the MCF could be greater than one also with an optimal combination of a uniform lump-sum tax and distortive taxes.
Author: Kenneth Scheve
Publisher: Princeton University Press
ISBN: 0691178291
Category : Political Science
Languages : en
Pages : 282
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Book Description
A groundbreaking history of why governments do—and don't—tax the rich In today's social climate of acknowledged and growing inequality, why are there not greater efforts to tax the rich? In this wide-ranging and provocative book, Kenneth Scheve and David Stasavage ask when and why countries tax their wealthiest citizens—and their answers may surprise you. Taxing the Rich draws on unparalleled evidence from twenty countries over the last two centuries to provide the broadest and most in-depth history of progressive taxation available. Scheve and Stasavage explore the intellectual and political debates surrounding the taxation of the wealthy while also providing the most detailed examination to date of when taxes have been levied against the rich and when they haven't. Fairness in debates about taxing the rich has depended on different views of what it means to treat people as equals and whether taxing the rich advances or undermines this norm. Scheve and Stasavage argue that governments don't tax the rich just because inequality is high or rising—they do it when people believe that such taxes compensate for the state unfairly privileging the wealthy. Progressive taxation saw its heyday in the twentieth century, when compensatory arguments for taxing the rich focused on unequal sacrifice in mass warfare. Today, as technology gives rise to wars of more limited mobilization, such arguments are no longer persuasive. Taxing the Rich shows how the future of tax reform will depend on whether political and economic conditions allow for new compensatory arguments to be made.
Author: Ms.Era Dabla-Norris
Publisher: International Monetary Fund
ISBN: 1513547437
Category : Business & Economics
Languages : en
Pages : 39
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Book Description
This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.
Author: Howell H. Zee
Publisher:
ISBN:
Category :
Languages : en
Pages : 29
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Book Description
This paper explores the revenue-raising aspect of progressive taxation and derives, on the basis of a simple model, the optimal degree of tax progressivity where the tax revenue is used exclusively to finance (perfectly) targeted transfers to the poor. The paper shows that not only would it be optimal to finance the targeted transfers with progressive taxation, but that the optimal progressivity increases unambiguously with growing income inequality. This conclusion holds up under different assumptions about the efficiency cost of taxation and society`s aversion to inequality.
Author: Mr.David Coady
Publisher: International Monetary Fund
ISBN: 1513547046
Category : Business & Economics
Languages : en
Pages : 27
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Book Description
There is a growing debate on the relative merits of universal and targeted social assistance transfers in achieving income redistribution objectives. While the benefits of targeting are clear, i.e., a larger poverty impact for a given transfer budget or lower fiscal cost for a given poverty impact, in practice targeting also comes with various costs, including incentive, administrative, social and political costs. The appropriate balance between targeted and universal transfers will therefore depend on how countries decide to trade-off these costs and benefits as well as on the potential for redistribution through taxes. This paper discusses the trade-offs that arise in different country contexts and the potential for strengthening fiscal redistribution in advanced and developing countries, including through expanding transfer coverage and progressive tax financing.
Author: Mr.Jonathan David Ostry
Publisher: International Monetary Fund
ISBN: 1484397657
Category : Business & Economics
Languages : en
Pages : 30
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Book Description
The Fund has recognized in recent years that one cannot separate issues of economic growth and stability on one hand and equality on the other. Indeed, there is a strong case for considering inequality and an inability to sustain economic growth as two sides of the same coin. Central to the Fund’s mandate is providing advice that will enable members’ economies to grow on a sustained basis. But the Fund has rightly been cautious about recommending the use of redistributive policies given that such policies may themselves undercut economic efficiency and the prospects for sustained growth (the so-called “leaky bucket” hypothesis written about by the famous Yale economist Arthur Okun in the 1970s). This SDN follows up the previous SDN on inequality and growth by focusing on the role of redistribution. It finds that, from the perspective of the best available macroeconomic data, there is not a lot of evidence that redistribution has in fact undercut economic growth (except in extreme cases). One should be careful not to assume therefore—as Okun and others have—that there is a big tradeoff between redistribution and growth. The best available macroeconomic data do not support such a conclusion.
Author: Mr.Joel Slemrod
Publisher: International Monetary Fund
ISBN: 1451954549
Category : Business & Economics
Languages : en
Pages : 32
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Book Description
It is argued that taxation causes three kinds of deadweight losses and two types of direct costs. The deadweight losses arise from substitution, evasion, and avoidance activities while the direct costs are administrative and compliance costs. Some of these social costs tend to be discontinuous and/or nonconvex. Because most models of taxation ignore some components of the social costs of taxation, their conclusions cannot be of a general nature. An alternative approach to policy evaluation is to rely on a marginal efficiency cost of funds rule which can indicate appropriate directions of reforms. The paper discusses its merits, applicability, and limitations, as well as its relationship to other concepts.
Author: National Academies of Sciences, Engineering, and Medicine
Publisher: National Academies Press
ISBN: 0309452961
Category : Medical
Languages : en
Pages : 583
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Book Description
In the United States, some populations suffer from far greater disparities in health than others. Those disparities are caused not only by fundamental differences in health status across segments of the population, but also because of inequities in factors that impact health status, so-called determinants of health. Only part of an individual's health status depends on his or her behavior and choice; community-wide problems like poverty, unemployment, poor education, inadequate housing, poor public transportation, interpersonal violence, and decaying neighborhoods also contribute to health inequities, as well as the historic and ongoing interplay of structures, policies, and norms that shape lives. When these factors are not optimal in a community, it does not mean they are intractable: such inequities can be mitigated by social policies that can shape health in powerful ways. Communities in Action: Pathways to Health Equity seeks to delineate the causes of and the solutions to health inequities in the United States. This report focuses on what communities can do to promote health equity, what actions are needed by the many and varied stakeholders that are part of communities or support them, as well as the root causes and structural barriers that need to be overcome.
Author: Mr.Sanjeev Gupta
Publisher: International Monetary Fund
ISBN: 1451849842
Category : Business & Economics
Languages : en
Pages : 42
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Book Description
This paper demonstrates that high and rising corruption increases income inequality and poverty by reducing economic growth, the progressivity of the tax system, the level and effectiveness of social spending, and the formation of human capital, and by perpetuating an unequal distribution of asset ownership and unequal access to education. These findings hold for countries with different growth experiences, at different stages of development, and using various indices of corruption. An important implication of these results is that policies that reduce corruption will also lower income inequality and poverty.
Author: William G. Gale
Publisher: Rowman & Littlefield
ISBN: 9780815719861
Category : Business & Economics
Languages : en
Pages : 544
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Book Description
Although estate and gift taxes raise a small fraction of federal revenues, they have become sources of increasing political controversy. This book is designed to inform the current policy debate and build a conceptual basis for future scholarship. The book contains eleven original studies of estate and gift taxes, along with discussants' comments. The essays provide background and historical information; analyze the optimal taxation of estates and gifts; examine the effects of the tax on charitable contributions, saving behavior, the distribution and level of wealth, tax avoidance and tax evasion; and explore the effects of alternatives to estate taxation.
