Political support and tax reforms with an application to Italy

In 2001 the Italian government introduced a personal income tax reform to be implemented in successive phases. In 2004 taxes were reduced to all income levels with higher gains for low-income and high-income individuals than for middle-income ones. A large debate arised. This paper explores the political economy reasons under this tax reform, mainly the attempt of the government to attract the uncertain voters (swing voters). A probabilistic voting model is introduced to capture the importance of swing voters. The model predicts that the average personal income tax rate tends to be lower for groups of lower income, higher preference for leisure and containing more politically mobile voters (swing voters). However, data from Italian polls show that, while the tax reform was a good strategy to attract swing voters, the specific design of the reform, which favored high-income and low-income individuals, but not the middle class, was not the more appropriate strategy.     

The attitudinal consequences of the tax revolt

This paper attempts to assess the strength and direction of the attitudinal consequences of the tax revolt. An initial taxonomy of potential attitudinal effects is developed in the first section via a brief examination of the attitude-based explanations of the revolt. Those effect hypotheses are then tested via a pretest-posttest comparison group design analysis of 1976, 1978, and 1980 American National Election Study data. The results of those tests are discussed in the final section.     

The power not to tax: A search for effective controls

Although the primary purpose of the Congressional Budget and Impoundment Control Act of 1974 was to gain greater congressional control over federal spending, the act also represented a small but significant step toward controlling the substantial financial commitments made through the numerous exclusions, deductions, and credits in the federal income tax. In the Budget Act Congress, for the first time, recognized and defined these “tax expenditures” and adopted procedures for reviewing them. But tax expenditure budgeting has not had the beneficial effect that some had hoped, mainly because the 1974 effort failed to take adequate account of the organizational structure of Congress and of the political character of its decision-making. But these weaknesses can be overcome.     

Treasury Department regulatory material under the tax code

The legislative process in the tax field and the administrative process for the issuance of regulatory and interpretative material by the Treasury Department are closely coordinated. The same persons and interests both inside and outside of Government are involved in both processes. There is thus continuity of expertise, understanding of what is at stake, adversary viewpoints, and Washington knowhow. The preparation of administrative material within the Treasury is a task for those technical personnel and policy officials who in varying degrees also have a voice in the preparation of the Treasury's legislative position and the legislative development of statutory language. The outside forces who watch legislative activity also closely watch administrative activity and seek to shape the latter just so they do the former. The response of the Treasury is much the same in both situations, and governed by the policies, attitudes and predilections of tax policy officials and career personnel.     

The role of tax bases and collections costs in the determination of income tax rates,seigniorage and inflation

A growing theoretical literature on optimal taxation predicts that governments will set the tax rates on money holdings and on more traditional tax bases to minimize the deadweight losses of collecting government revenue. Under the presumption that relative collection costs and tax bases have not changed significantly over time, the empirical time-series seigniorage literature has focused on the theory's tax smoothing implication, finding only weak support. We show that changes in collections costs and tax bases played an important role in the determination of tax composition and find stronger support for tax smoothing when this is taken into account.     

Inequality, the politics of redistribution and the tax mix

Political economy literature generally predicts a positive relationship between income inequality and redistribution. However, there is no clear empirical evidence supporting such a relationship. By incorporating an informal sector that evades income taxes, we account for the tax-base effect that, along with the political channel, determines the equilibrium redistribution and tax mix. We find a non-monotonic relationship between inequality and redistribution and explore under which conditions an unequal society relies more heavily on indirect taxes to finance redistribution. Ultimately, this paper shows the limitations of the income tax to finance redistribution in developing countries even when taxes are democratically chosen.     

The “growth tax” in the United States

By providing public goods, including law and order, national defense, and income redistribution that expands the gains from exchange (the scope and membership of the constitutional agreement), government expenditures act as a positive externality on the growth rate. Beyond that level, taxes act as a negative externality. In this paper a simple model is formulated and the optimal (growth-maximizing) tax rate found. Empirical estimation finds it to be in the range of 21.5–22.9 percent. The effect of taxation beyond this level is a cumulative loss of about $30 trillion (1972 dollars) in GNP over the period 1949–89.     

Does capital mobility reduce the corporate-labor tax ratio?

Previous empirical studies have shown that there is only a small negative (if any) effect of capital mobility on the corporate tax burden. Using data for up to 20 OECD countries in the period 1979–2000 this paper tries to investigate a less rigid hypothesis: Although capital taxes have not substantially declined in the last twenty years the relative burden of corporate to labor taxes may have fallen due to capital mobility. The results suggest that capital mobility has a weak negative impact on the corporate-labor tax ratio. Other factors however, i.e. the size of the country or the share of investment expenditures are more important in explaining the relative tax burden than capital mobility.     

Voting over taxes: the case of tax evasion

This paper studies majority voting on taxes when tax evasion is possible. We characterize the voting equilibrium where the agent with median taxed income is pivotal. Since the ranking of true incomes does not necessarily correspond to the ranking of taxed incomes, the decisive voter can differ from the median income receiver. In this case, we find unconventional patterns of redistribution, e.g., from the middle class to the poor and the rich.     

Local autonomy, tax morale, and the shadow economy

Policymakers often propose strict enforcement strategies to fight the shadow economy and to increase tax morale. However, there is an alternative bottom-up approach that decentralises political power to those who are close to the problems. This paper analyses the relationship with local autonomy. We use data on tax morale at the individual level and macro data on the size of the shadow economy to analyse the relevance of local autonomy and compliance in Switzerland. The findings suggest that there is a positive (negative) relationship between local autonomy and tax morale (size of the shadow economy).     

网络代购行为的税收法律问题探析

伴随着我国商业社会的进步和信息技术的迅猛发展,电子商务已逐渐融入到人们的日常生活,变成人们日常生活的一部分。作为近几年发展起来的网上代购行为以其独特的优势逐渐成为众多青年人购物的一种新的方式。但对于网络代购行为这种新的消费方式我国学界一直没有给以清晰的界定,同时对于网络代购行为所涉及的税收问题也提及甚少。文章将主要在税收的范畴领域内对网络代购行为加以界定,对涉及的税收问题加以探讨。     

Governmental policies to reduce tax evasion: coerced behavior versus services and values development

Governments generally have at their disposal two types of tax compliance policies. One set of policy options coerces tax compliance by increasing risks for practicing tax evasion, while a second set of policies emphasizes development of supportive taxpaying values among citizens through service improvement and informational strategies. Tax agencies tend to favor coercive policies, but empirical research suggests that such policies are not in themselves fully adequate to fight tax evasion. Four hypotheses are offered which suggest the utility of service and values based policies and the need for increased investment in those areas of tax administration.