scholarly journals Reforming the individual income tax in Spain

SERIEs ◽  
2020 ◽  
Vol 11 (4) ◽  
pp. 369-406 ◽  
Author(s):  
Nezih Guner ◽  
Javier López-Segovia ◽  
Roberto Ramos
Keyword(s):  
Labor Supply ◽  
Income Taxes ◽  
Tax Revenue ◽  
Labor Income ◽  
Marginal Tax Rate ◽  
Tax Rate ◽  
Percentage Points ◽  
The Mean ◽  
The Government ◽  
The Individual

AbstractCan the Spanish government generate more tax revenue by making personal income taxes more progressive? To answer this question, we build a life-cycle economy with uninsurable labor productivity risk and endogenous labor supply. Individuals face progressive taxes on labor and capital incomes and proportional taxes that capture social security, corporate income, and consumption taxes. Our answer is yes, but not much. A reform that increases labor income taxes for individuals who earn more than the mean labor income and reduces taxes for those who earn less than the mean labor income generates a small additional revenue. The revenue from labor income taxes is maximized at an effective marginal tax rate of 51.6% (38.9%) for the richest 1% (5%) of individuals, versus 46.3% (34.7%) in the benchmark economy. The increase in revenue from labor income taxes is only 0.82%, while the total tax revenue declines by 1.55%. The higher progressivity is associated with lower aggregate labor supply and capital. As a result, the government collects higher taxes from a smaller economy. The total tax revenue is higher if marginal taxes are raised only for the top earners. The increase, however, must be substantial and cover a large segment of top earners. The rise in tax collection from a 3 percentage points increase on the top 1% is just 0.09%. A 10 percentage points increase on the top 10% of earners (those who earn more than €41,699) raises total tax revenue by 2.81%.

HOW COSTLY ARE BORROWING COSTS? AN ANALYSIS OF ALTERNATIVE FISCAL POLICIES DURING CRISES

2015 ◽  
Vol 21 (5) ◽  
pp. 1141-1157
Author(s):  
Inci Gumus
Keyword(s):  
Borrowing Constraints ◽  
Labor Income ◽  
Fiscal Policies ◽  
Capital Income ◽  
Tax Rate ◽  
Percentage Points ◽  
Tax Reduction ◽  
Labor Tax ◽  
The Government ◽  
Spending Cuts

Financial crises lead to substantial declines in output and consumption in emerging markets. The fact that fiscal policy is procyclical in these countries shows that the effects of a crisis are exacerbated by spending cuts and tax increases, which are usually attributed to borrowing constraints they face in bad times. This paper quantitatively analyzes the costs of reduced borrowing during crises by studying the effects of expansionary fiscal policies that would have been possible to implement, had the government been able to borrow more. The model shows that a 25% reduction of taxes on labor income, capital income, and consumption during the 1997 Korean crisis would have required an additional borrowing of 4.10% of GDP, while increasing output and consumption by 5.23 and 5.92 percentage points, respectively. When the effects of each tax rate are analyzed separately, labor tax reduction turns out to be more effective than the other policies.

The Wage Response to a Reduction in Income Tax Rates: The Israeli Tax Reform

2020 ◽  
Vol 20 (2) ◽  
Author(s):  
Roni Frish ◽  
Noam Zussman ◽  
Sophia Igdalov
Keyword(s):  
Income Tax ◽  
Tax Reform ◽  
Tax Rates ◽  
Rate Reduction ◽  
Or Education ◽  
Marginal Tax Rate ◽  
Tax Rate ◽  
Percentage Points ◽  
Wage Earners ◽  
Income Tax Reform

AbstractThis study examines the effect of an income tax reform on wages. An Israeli reform implemented in 2003–2009 reduced individuals’ marginal income tax rate by 7–17 percentage points. We utilized the differential and non-monotonic marginal tax rate reduction, and used Israel Tax Authority panel data of wage earners, merged with Labor Force Surveys. We found that in the business sector, the elasticity of reported gross wages relative to the net-of-tax rate is about 0.1. The wage earners in the lowest wage quintile were not affected by the tax reform, those in the second and third quintiles did not respond to the tax cut, but elasticity increased with wage, reaching about 0.4 in the upper decile. We did not find statistically significant differences in elasticity by gender, ethnicity, or education.

scholarly journals THE EVOLUTION OF TAXES AND HOURS WORKED IN AUSTRIA, 1970–2005

2014 ◽  
Vol 19 (8) ◽  
pp. 1800-1815 ◽  
Author(s):  
John T. Dalton
Keyword(s):  
General Equilibrium ◽  
Growth Model ◽  
Labor Income ◽  
Marginal Tax Rate ◽  
Hours Worked ◽  
Tax Rate ◽  
Time Period ◽  
Working Age ◽  
Equilibrium Growth

Aggregate hours worked per working-age person decreased in Austria by 25% from 1970 to 2005. During the same time period, taxes increased, particularly the effective marginal tax rate on labor income. Using a standard general equilibrium growth model with taxes, I quantitatively assess the role played by the evolution of taxes in the evolution of hours worked in Austria. The model accounts for 76% of the observed decrease in hours worked per working-age person. My results are in line with other studies, which find taxes play an important role in explaining aggregate hours worked.

scholarly journals The Public Willingness to Pay for Reducing the Incidence of Hazardous Chemical Spill Accidents by Half in South Korea

2018 ◽  
Vol 10 (8) ◽  
pp. 2673 ◽  
Author(s):  
Hye-Jeong Lee ◽  
Hyo-Jin Kim ◽  
Seung-Hoon Yoo
Keyword(s):  
South Korea ◽  
Willingness To Pay ◽  
Income Taxes ◽  
Government Officials ◽  
The Public ◽  
Hazardous Chemical ◽  
Spike Model ◽  
The Mean ◽  
The Government ◽  
Transport Accidents

Hazardous chemical spill (HCS) accidents, which occur due to careless workers, transport accidents, etc., can be harmful to humans. Recently, an average of 96 cases of HCS accidents have taken place in South Korea annually. As a result, the government is trying to reduce the incidence of HCS accidents by 50%. Government officials are seeking information about the value that the enforcement of the reduction plan will bring for the public. This knowledge will help government officials decide whether to implement the reduction plan. This article seeks to acquire information about the public willingness to pay (WTP) for the reduction plan, employing the contingent valuation (CV) technique. For this purpose, a total of 1000 households living in South Korea participated in the CV survey in 2017. The data on the WTP were gathered using a dichotomous choice question and analyzed using the spike model. Forty-five percent of the respondents were willing to accept an increase in income taxes to carry out the reduction plan. The mean household WTP estimate was obtained as KRW 3830 (USD 3.41) per annum. The national value expanded from the sample to the population is worth KRW 74.8 billion (USD 66.6 million) per year. This value implies the public value of the reduction plan and can be applied in policy analysis and decision-making concerning the reduction of the incidence of HCS accidents.

Effects of Unitary vs. Nonunitary State Income Taxes on Interstate Resource Allocation: Some Analytical and Simulation Results

2001 ◽  
Vol 23 (1) ◽  
pp. 39-60 ◽  
Author(s):  
Michael G. Williams ◽  
Charles W. Swenson ◽  
Terry L. Lease
Keyword(s):  
State Government ◽  
Income Taxes ◽  
Tax Credits ◽  
Tax Revenue ◽  
Tax Rates ◽  
Tax Rate ◽  
Unitary State ◽  
State Tax ◽  
State Income ◽  
Tax Structures

This study examines the optimal location choice decisions of a two-state firm in response to changing state corporate income tax rates and tax structures. Because the firm can engineer its tax liability by manipulating between-state location of sales, property, and payroll, changes in relative state tax rates should result in the firm making such location changes. Results of a model firm simulation, examining various combinations of state tax rates and unitary vs. nonunitary tax structures, found that the firm would make interstate resource changes to minimize company-wide state income taxes. Important findings of the study are that tax rate changes in nonunitary states may cause little or no change in resources used in that state. Indeed, in one scenario, the resulting resource flows from a tax increase are favorable to the nonunitary state, making a tax increase a win-win situation for the state government (higher tax revenue and more economic activity). In contrast, changes in unitary state tax rates can result in significant resource changes in both the unitary state and in other states. The finding that tax rate cuts are ineffective in nonunitary states implies that these states may be more successful in attracting investment by changes affecting apportionment factors (tax credits for new capital, or new jobs) or by use of nontax incentives.

Labor supply responses to income tax free and bracket expansions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Panayiota Lyssiotou ◽  
Elena Savva
Keyword(s):  
Labor Supply ◽  
Income Taxation ◽  
Foreign Workers ◽  
Tax Rates ◽  
Marginal Tax Rate ◽  
Men And Women ◽  
Content Type ◽  
Tax Rate ◽  
Marginal Tax Rates ◽  
Males And Females

PurposeAn important concern of economic policy analysis is how income taxes affect labor supply since this is crucial in assessing the efficiency costs of taxation and designing labor income taxation. The focus in the literature has been mostly to study the responses of high earners and women. The authors contribute to this literature by focusing more on how middle earners respond to financial incentives and whether the responses are different between men and women.Design/methodology/approachThe authors exploit substantial expansions in the level of individual income exempt from taxation and taxed at a lower marginal tax rate while the schedule of marginal tax rates remained the same. The authors adopt an empirical framework that is similar to Bosch and van der Klaauw (2012) and condition on the effects of other factors, such as inflows of foreign workers that may have affected the wages, participation and working hours of native males and females. The authors also conduct various sensitivity analyses to examine the robustness of the estimates.FindingsThe authors find robust evidence that the tax reforms increased the wages of medium and high educated married males and females significantly. They also had a positive impact on work participation that was more substantial for married women, especially the medium educated. The authors estimate significant positive own wage labor supply elasticities that are small and about the same for men and women when the authors condition on the labor outcome effects of inflows of EU and non-EU foreign workers, which changed the skill distribution of the economy and had a more significant impact on female labor outcomes. Smaller wage labor supply elasticities indicate lower disincentive effects and deadweight losses from the imposition of taxes and have implications on the design of optimal taxation of men and women.Originality/valuePrevious investigations of the labor supply responses of both men and women to a given policy change have been identified mostly by exploiting changes in joint income taxation and marginal tax rates. The authors exploit substantial expansions in the level of individual income exempt from taxation and taxed at a lower marginal tax rate while the schedule of marginal tax rates remained the same. The income effects of these reforms could be limited since the reduced marginal tax rates apply to only part of the income.

What is the optimal age for withdrawing Social Security Benefits? Full Retirement Age, Late Withdrawal Age of 70, or Early Withdrawal Age of 62

2021 ◽  
Vol 8 (12) ◽  
pp. 175-192
Author(s):  
Anurag Pant ◽  
Raj K. Kohli
Keyword(s):  
Social Security ◽  
Family Income ◽  
Retirement Age ◽  
Single Family ◽  
Marginal Tax Rate ◽  
Family Responsibilities ◽  
Tax Rate ◽  
Early Withdrawal ◽  
The Individual ◽  
Social Security Benefits

When to retire is an individual decision based on many criteria like health of the individual, family responsibilities, expected life of the individual, single family income or dual family income, and other such considerations. A financial consideration can also be made. Retiring early will imply a reduction in social security benefits for the rest of your life. Retiring later than your full retirement age can mean a significant bump in benefits for the rest of your life. This paper simulates different conditions to estimate how long a life one needs to live to recover from the reduction in benefits resulting from earlier retirements.  Specifically, we model four permutations of the time value of money and the marginal tax rate on early benefits. Our results show there are significant advantages of withdrawing early benefits in most cases where life expectancy is shorter. But when expected life terms are much higher above 83, delaying retirement can significantly enhance the payout of benefits.

Is exit tax a good idea for the taxman?

2018 ◽  
Vol 45 (4) ◽  
pp. 810-828
Author(s):  
Darong Dai
Keyword(s):  
Capital Accumulation ◽  
Design Methodology ◽  
Empirical Studies ◽  
Income Taxes ◽  
Sales Tax ◽  
Tax Revenue ◽  
Labor Income ◽  
Capital Income ◽  
Content Type ◽  
Lump Sum

Purpose The purpose of this paper is to study whether it is a rational choice for a tax authority to impose an exit tax on capitalists. Design/methodology/approach The tax authority chooses a lump-sum exit tax to maximize a weighted objective of expected tax revenue and expected tax horizon. The tax revene consists of capital income taxes and exit taxes. Capitalists are motivated by sustainable capital accumulation and hence maximize the terminal capital stock. Findings The author finds that the objective function of the tax authority is strictly increasing in the exit tax, which holds for extensions with sales tax, labor income tax or proportional exit tax, and hence equilibrium exit tax is equal to an exogenous upper bound. Originality/value To the author’s knowledge, no existing literature investigates this issue theoretically, and hence the current paper represents the first attempt. The author hopes this theoretical analysis can trigger related empirical studies.

Reformoptionen der Familienbesteuerung

2007 ◽  
Vol 58 (1) ◽  
pp. 1-27 ◽  
Author(s):  
Christian Bergs ◽  
Clemens Fuest ◽  
Andreas Peichl ◽  
Thilo Schaefer
Keyword(s):  
Family Income ◽  
Labour Supply ◽  
Married Couples ◽  
Real Income ◽  
Tax Revenue ◽  
Policy Debate ◽  
Marginal Tax Rate ◽  
Distributional Effects ◽  
Tax Rate ◽  
Households With Children

SummaryThe aging of the population in Germany has led to growing concerns among politicians about the economic situation of households with children. This is also reflected in the recent tax policy debate on reforming the taxation of families and married couples. The purpose of this paper is threefold. We use a micro­simulation approach to analyse how various reforms of family taxation would affect the incomes of families compared to singles and married couples without children. Moreover, we address the distributional effects across different income deciles. Finally, we quantify tax revenue effects as well as possible consequences for labour supply. We focus on limited real income splitting systems.The simulation results show that limited real income splitting produces rather moderate vertical distributional effects, compared e.g. with the joint family income splitting of the French type. Furthermore real income splitting would lower the marginal tax rate on the second earner’s income, creating incentives to take up employment. It would also generate additional tax revenue.

TWO COMPUTATIONS TO FUND SOCIAL SECURITY

1997 ◽  
Vol 1 (1) ◽  
pp. 7-44 ◽  
Author(s):  
HE HUANG ◽  
SELAHATTIN İMROHOROGˇLU ◽  
THOMAS J. SARGENT
Keyword(s):  
Social Security ◽  
Income Tax ◽  
Physical Capital ◽  
Labor Income ◽  
Income Volatility ◽  
Public Provision ◽  
Tax Rate ◽  
Output Ratio ◽  
The Government ◽  
The Impact

We use a general equilibrium model to study the impact of fully funding social security on the distribution of consumption across cohorts and over time. In an initial stationary equilibrium with an unfunded social security system, the capital/output ratio, debt/output ratio, and rate of return to capital are 3.2, 0.6, and 6.8%, respectively. In our first experiment, we suddenly terminate social security payments but compensate entitled generations by a massive one-time increase in government debt. Eventually, the aggregate physical capital stock rises by 40%, the return on capital falls to 4.4%, and the labor income tax rate falls from 33.9 to 14%. We estimate the size of the entitlement debt to be 2.7 times real GDP, which is paid off by levying a 38% labor income tax rate during the first 40 years of the transition. In our second experiment, we leave social security benefits untouched but force the government temporarily to increase the tax on labor income so as gradually to accumulate private physical capital, from the proceeds of which it eventually finances social security payments. This particular government-run funding scheme delivers larger efficiency gains (in both the exogenous and endogenous price cases) than privatization, an outcome stemming from the scheme's public provision of insurance both against life-span risk and labor income volatility.

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