Abstract: I derive an optimal benefit-based corporate tax rate formula as a function of the public input elasticity of profits and the (net of) tax elasticity of profits. I argue that the existence of the corporate income tax should be justified by the benefit-based view of taxation: firms should pay tax according to the benefits they receive from the use of the public input. I argue that...
We analyze the gross welfare gains from real-time retail pricing in electricity markets where carbon taxation induces investment in variable renewable technologies. Applying a stylized numerical electricity market model, we find a U-shaped association between carbon taxation and gross welfare gains. The benefits of introducing real-time pricing can accordingly be relatively low at relatively high carbon ...
We decompose permanent earnings risk into contributions from hours and wage shocks. To distinguish between hours shocks, modeled as innovations to the marginal disutility of work, and labor supply reactions to wage shocks we formulate a life-cycle model of consumption and labor supply. Both permanent wage and hours shocks are important to explain earnings risk, but wage shocks have greater relevance. ...
We examine the effect of local business taxation and local public good and service (PIGS) provision on the number and spatial distribution of new firms. Testing ground is Germany and we rely on the universe of firm foundations between 1998 and 2006. Methodologically, we estimate fixed effects poisson models coupled with a control function approach. The results suggest that a 1%-decrease in the business ...
“Sin taxes” are high on the political agenda in the global fight against obesity. Ac- cording to theory, they are welfare improving if consumers with low self-control are at least as price responsive as consumers with high self-control, even in the absence of ex- ternalities. In this paper, we investigate if consumers with low and high self-control react differently to sin tax variation. For identification, ...
Following the global financial crisis of 2008/2009, many European countries introduced bank levies to enable financial institutions to share in the costs of future banking crises via resolution and restructuring funds. Simultaneously, bank levies can set an incentive for banks to reduce their leverage, thereby achieving a more stable capital structure. Using information from banks’ balance sheets, ...
Regulatory bank levies set incentives for banks to reduce leverage. At the same time, corporate income taxation makes funding through debt more attractive. In this paper, we explore how regulatory levies affect bank capital structure, depending on corporate income taxation. Based on bank balance sheet data from 2006 to 2014 for a panel of EU-banks, our analysis yields three main results: The introduction ...
While in January 2012, Denmark increased the long-standing tax on sugary soft drinks, the tax was cut byhalf in July 2013 and then completely repealed in January 2014. In this study, we examine whetherincreases and cuts of the soft drink tax lead to similar over- or under-shifting to prices and to similardemand responses. We use longitudinal scanner data of 1,282 Danish households to estimate within-product ...
Sarah Perret, OECD, will present findings from a recent report on The Role and Design of Net Wealth Taxes in the OECD. The presentation will give an overview of the cases for and against net wealth taxes, as well as describe how wealth taxes have been designed in practice in the OECD countries that currently have or historically had net wealth taxes. Inheritance taxes, which constitute an...
Abstract: We study how attitudes to inheritance taxation are influenced by information about the role of inherited wealth in society. Using a randomized experiment in a register-linked Swedish survey, we find that informing individuals about the large aggregate importance of inherited wealth and its link to inequality of opportunity significantly increases the support for inheritance taxation. The...
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