The Political Economy of Tax Coordination as a Bargaining Game Between Bureaucrats and Politicians

In the public finance literature, the view prevails that taxcompetition among countries gives rise to an underprovision ofpublic goods and that coordinated tax increases are thereforedesirable. Public choice arguments, in contrast, suggest thattax coordination may not be in the interest of thetaxpayers/citizens because imperfections of the politicalprocess (political distortions) may lead to a waste of taxmoney. According to this view, tax competition is a desirablecheck on the power to tax whereas tax coordination would onlyrelax the budget constraint of an inefficient public sector.The present paper integrates the underprovision argument andthe public choice view into a common theoretical framework.The government is assumed to consist of politicians andbureaucrats with diverging interests. Fiscal policy ismodelled as the outcome of a bargaining game between thebureaucrats and the politicians. It turns out that coordinatedtax increases always raise the provision of public goods butalso increase the cost of political distortions. The effect onthe welfare of the representative citizen may be positive ofnegative, depending in particular on the distribution ofbargaining power between bureaucrats and politicians.     

Tax Challenges in the Global Economy

Globalization has increased significantly over the past two decades, provoking different political reactions. Increasing trade and financial openness as well as intense global economic competition have forced governments to intervene in order to deal with its different negative consequences such as budget deficits or growing unemployment. Over the last two decades, almost all OECD （Organization for Economic Co-operation and Development） countries have undertaken structural changes within their tax systems. However, two main problems appear. The first one concerns ＂tax competition＂ understood as improvements made by different countries in the field of investment climate especially in the field of economic freedom. The second one refers to the effective tax revenue resources that help maintain the welfare state properly. In the developed countries, this is certainly easier as richer societies afford to do it through their fiscal systems. The main aim of this paper is to examine the impact of globalization on tax policy--its nature and its transformations. The main conclusions are as follows： Globalization is an incredible opportunity for the private sector to take advantage of free movement of goods, services, capital, and people. At the same time, it is a great challenge for the public sector to maintain sound public finance. The analysis is based on statistical data and qualitative research methods.     

The Tax Revolt and Electoral Competition

This paper explores the effect of electoral competition onstate and local expenditures in the US during the politicalenvironment following the tax revolt of the late 1970s. Itutilizes a theoretical model in which both electoralcompetition and tax and expenditure limits impact spending.Empirical results indicate the tax revolt's primary impact wastransmitted through political candidate competition, notthrough the adoption of tax or expenditure limitations, as iscommonly believed. However, tax and expenditure limits doaffect public education expenditures.     

Tax decentralization and local government size

This paper investigates the relationship between fiscal federalism and the sizes of local governments. While many empirical studies emphasized that grants encourage the growth of local public spending and local taxes constrain it, they are more silent regarding the effects of different types of tax autonomy. The paper addresses this issue by arguing that tax decentralization as organized on tax bases used only by local governments (tax-separation), rather than on tax-base sharing, would restrain local public expenditures. Using an unbalanced panel of OECD countries, the key finding is that only property taxes—mostly based on a “tax-separation” scheme—seem to favor smaller local governments. Thus, while tax decentralization is a necessary condition for limiting the growth of local governments, it does not appear sufficient, as tax-separation schemes among government levels would in fact be required.     

Tax Competition and Tax Coordination in a Median Voter Model

This paper analyzes the welfare effects of capital tax coordination in a simple model of fiscal competition where fiscal policy is subject to majority voting and households differ with respect to their labor and capital income. It turns out that a coordinated capital tax increase may raise or reduce welfare, depending on the relative magnitude of i) economic distortions induced by a labor tax and ii) political distortions resulting from the influence of the median voter on fiscal policy decisions. A negative welfare effect is more likely, the smaller the marginal excess burden of the labor tax and the smaller the ratio of the median voter's labor income to average labor income. We also use empirical estimates of the marginal excess burden of taxation to determine the welfare effects of tax coordination; it turns out that a negative welfare effect of coordinated tax increases may emerge in our model for empirically reasonable parameters.     

How Governments Respond to Business Demands for Tax Cuts: A Study of Corporate and Inheritance Tax Reforms in Austria and Sweden

How responsive are democratic governments to business demands for tax cuts? We research this question in comparative case studies of cuts in corporate taxes and inheritance taxes in Austria and Sweden. We find that governments, regardless of partisan composition, are responsive to business demands, but that fiscal and electoral goals attenuate responsiveness. In both countries, the limited revenues generated by inheritance taxation and greater alignment of business demands with middle‐class voter interests resulted in governments heading business demands for an abolition of this tax. Goal conflict were larger for corporate tax cuts. In both countries, governments tried to minimize these goal conflict by adopting compensatory policy measures, specifically measures to broaden the tax base and simultaneous tax cuts for low‐income groups. The findings suggest that the policy output of business‐friendly tax cuts reflect a balancing of conflicting goals, rather than outright business dominance.     

Tax and Expenditure Limitations and State and Local Fiscal Structure: An Empirical Assessment

The tax and expenditure limitation (TEL) "movement" of the 1970s and 1980s can be characterized in part as a struggle between local autonomy and state control. Undeniable shifts have occurred over the same period in state and local revenue systems and functional responsibilities. This article places these shifts within the context of this movement, using pooled, cross-sectional, time-series techniques for the period between 1970 and 1990, in an effort to assess its impacts. Findings suggest that TELs have resulted in increased centralization, lessened local responsiveness, increased use of local non-tax sources of revenue, and a sector less accommodating to the needs of dependent populations. TELs may have also had dubious effects on both the allocative efficiency and equity of the state and local public sector.     

Tax Evasion from a Policy Perspective: The Case of the Motor Fuels Tax

In recent years, many state legislatures have proposed, considered, and adopted legislation intended to thwart fuel tax evasion. Despite the recent political activity of state legislatures to increase fuel tax compliance, there is relatively little research examining the evasion of excise taxes in general or the motor‐fuel tax in particular. This article examines the issues of fuel tax evasion from a policy perspective. We discuss the vulnerability of the fuel tax to evasion and examine how state legislatures in the southern region have responded to the tax evasion issue. We focus the examination on four major initiatives implemented at the federal level in four broad policy areas: tax administration, penalties and punishments, liability, and visibility and enforcement. These findings provide important insight for developing new strategies to enhance compliance to the fuel tax in particular and excise taxes in general. Furthermore, we discuss how issues of fuel tax compliance can be extended to other compliance issues such as Medicare fraud.     

突发公共事件视域下应急财税政策探究

突发公共事件对经济社会运行秩序造成的冲击难以通过市场机制有效解决,国家出台应急财税政策防范化解突发公共事件造成的危机是政府义不容辞的职责。党的十九届五中全会也提出要"建立现代财税金融体制,加强财政资源统筹,增强国家重大战略任务财力保障"。2020年,我国运用一系列应急财税政策对冲新冠肺炎疫情影响,有效保障了疫情防控任务的高效落实和经济社会的恢复发展。探讨我国现行应急财税体制现状、问题及其优化策略,对于高效应对突发公共事件进而实现国家治理能力提升十分必要。     

Who Gains from Charitable Tax Credit Programs? The Arizona Model

The Bush administration and some states have promoted charitable tax credits as a way to increase private charitable giving, to support antipoverty programs, and to allow taxpayers to directly determine the utility and effectiveness of nonprofit services. Looking at Arizona's charitable tax credit program, this study assesses the strengths and limitations of this policy approach. Although charitable giving increased during the first two years of the program (1998 and 1999), tax returns from 2000 suggest it may be difficult to sustain these gains in a weak economy. Larger and better-known nonprofits and taxpayers who itemize their returns are the primary beneficiaries of the program. The program may put small but well-run organizations at a competitive disadvantage, weaken accountability in the sector, and pose administrative challenges to state departments of revenue. This analysis suggests that tax credits are not a panacea for the funding needs of nonprofits.     

Mayoral Public Sector Work Experience and Tax Collection Performance in Colombian Local Governments

ABSTRACT

Local governments in Latin America tend to have limited capacity to collect taxes. Existing theory explains tax collection performance as a function of political, socio-economic, and cultural factors. Yet across Latin America, tax collection performance varies greatly between localities that are similar along these dimensions. We suggest that organizational capacity, represented by managers' human capital, explains variation in local tax collection performance. We test this theoretical idea against panel data on most Colombian local governments, where elected mayors are the top managers determining the local tax collection strategy. We examine two indicators of tax collection performance: (1) the per-capita amount of property tax collected and (2) property tax collected as a percentage of total property valuation. Controlling for important confounders, the length of the mayor's prior public sector work experience is positively associated with the per-capita amount of property tax collected but not the percentage of total property valuation collected in property tax. Our results suggest that Colombian mayors gain relevant skills over their career. Our study has implications for other developing countries with a similar property tax collection system.     

Say It With Candy: The Power of Framing Tax Increases as Items

Framing tax increases as frequent purchases appears to be a popular message strategy to generate donations and elicit support for policies. We test whether this strategy is effective at obtaining support for tax increases through two survey experiments. Results demonstrate that this message strategy—framing tax increases in terms of items—is more effective than stating the increase in terms of a yearly or weekly amount. This strategy appears to be effective when the amount of a tax increase is framed as a hedonic item and appears to be particularly effective as the tax amount requested increases and among those uninvolved with the issue under consideration.     

Mobilizing Interests: Group Participation and Competition in Direct Democracy Elections

We examine group mobilization in direct democracy elections by assessing the conditions under which interests will actively support or oppose ballot measures. Motivating our analysis is that the decision to mobilize is driven by the costs and benefits of group participation, a calculus shaped by issue characteristics, state political institutions, and the electoral context. Using data from initiative and referendum measures appearing on statewide ballots from 2003 to 2008, we find that ballot measures involving social and tax issues are likely to produce competition among groups and increase the overall number of groups involved. In addition, we find that group competition and levels of mobilization increased in response to how difficult it would be for the legislature to undo the change brought about from passage of a ballot measure. Lastly, group competition and levels of mobilization increased for ballot measures appearing in nonpresidential election years and for ballot measures featuring a close election. Taken together, our results suggest that groups engage strategically in direct democracy elections to pursue a mix of policy and political goals.     

The Demise of Tax Credits

Introduced in the late 1990s, tax credits grew under successive Labour governments to become a cornerstone of UK social policy. Distinguished from traditional welfare policies by their target group and their mode of administration, and with goals that appeared capable of commanding support across the ideological spectrum, tax credits until recently seemed to hold the key to tackling poverty in a politically popular manner. But since 2010 the tax credit system has been systematically dismantled, initially qualitatively and latterly also quantitatively. This paper discusses the multiple factors that help to explain the rapid fall from grace in the UK of this liberal approach to supporting the incomes of poor working households.     

Tax Increment Financing

Tax Increment Financing (TIP) uses the increase in taxes resulting from an area's redevelopment to help subsidize the costs of redevelopment. The paper focuses on the mechanisms and problems of using real property tax increments under Illinois law. Two distinct methods of calculating tax increments, the "aggregate" and "parcel" methods, are examined. A briefcase study is provided.     

Tax authority to the European Parliament?

In this paper we analyze whether countries of the EC community should plead for a decentralized system to finance the European funds rather than using a uniform tax imposed by the European parliament. The analysis is within a multistage game-theoretic framework in which the implication of the financing system of a confederation on the investment behavior in the respective states is considered. The paper is in the tradition of the literature which claims that from a view of global efficiency property-rights structures inducing ex-post efficient allocations may be worse than a system leading to an ex-post inefficient allocation. For this specific economic issue we elucidate the tradeoff between incentive effect and distributional policy. Especially we demonstrate that rather homogeneous countries benefit by installing a central tax institution. If the countries are rather heterogeneous, the countries may have opposing interests with respect to the answer of the question which is presented in the title. It is possible that the “high-developed” country prefers to install a central tax authority while the “low-developed” country does not. However, in general the reverse ordering which is more in line with our intuition results.     

Changing State Fiscal Capacity and Tax Effort in an Era of Devolving Government, 1981 2003

The American system of fiscal federalism requires that stateand local governments finance the bulk of their budgets fromown-source revenues, not transfers. This article analyzes statetotal taxable resources from 1981 to 2003 to evaluate how statefiscal capacity has changed in that time and how it has beenaffected by national recessions, to examine the extent to whichfiscal capacity differs among states and whether capacity hasconverged, and to consider whether states have responded toservice demands by changing tax effort and whether tax efforthas converged in the face of interstate competition and otherharmonizing forces. Because the capacity measure employed herecan be compared across years, something impossible with majoralternative indices, the analysis provides insights importantto the analysis of fiscal federalism and of the implicationsof revenue devolution not previously possible.     

Estimating Tax Evasion Losses: The Road Fund Case

Federal, state, and local government concern about the loss of state revenues from tax evasion has increased in recent years. In order for policymakers to address this issue effectively, more information regarding the nature and magnitude of the problem is needed. This article reports on research that focuses on estimating the level of road fund tax evasion for several states. Estimates of road fund tax evasion are developed from previous research regarding individual state evasion levels, perceptions of road fund tax evasion by state revenue officials, and a statistical estimate of road fund tax evasion.     

Quality awards as a public sector benchmarking concept in OECD member countries: some guidelines for quality award organizers

In many OECD member countries, quality awards have become an important benchmarking instrument for public and especially private sector organizations. Quality awards pursue two main goals: one is to introduce elements of competition in areas of the public and the private sectors that lack of market competition; the other is to encourage organizational learning. The problem is that in a public sector context these aims seem to be mutually exclusive. The aim of the article is to show quality award organizers how to realize the full potential of quality awards by making the appropriate choices in the design of a public sector quality award. The conclusion is that the stage of public sector quality management and the degree of ‘publicness’ of the public sector in a given country will influence the competition‐inducing and learning effect of a national quality award in an adverse way. Nevertheless, the negative effects on one or the other element of quality awards can be counterbalanced by the appropriate choice of the scope of the quality award, the area to be evaluated, the evaluation criteria as well as the benchmarking concept. Last but not least, quality award organizers should keep in mind that quality awards are not a benchmarking instrument for all seasons. Copyright © John Wiley & Sons, Ltd.     

影视产业国家促进的法制建构——以财税优惠政策为视角

自2018年影视行业补税风潮以来,影视行业的税收问题就成为实务界关注的焦点,然而影视行业的税收问题不仅是自查自纠、或是改变核定征收方式,更应该追本溯源检讨其源头。本文试对以财税优惠为代表的特定的产业政策是否能够发挥其功能、国家促进影视行业所应遵循的法治路径和扮演的角色定位等实践与理论问题予以思考、回应。文章对影视产业相关优惠政策的完善提出了建议,即财税优惠作为国家权力,首先,应遵循基本的权力限制原则,即实现财税优惠的法治化,既包括政策制定也包括执行环节;其次,优惠政策不能沦为企业规避法定义务的工具,即优惠政策的适用主体也应遵循从形式到实质的标准;最后,优惠政策应有合理的绩效评价和效应分析。