Previous articleNext article FreeSummaries of ArticlesSummaries of ArticlesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMorePrice Isn’t Everything: Behavioral Response Around Changes In Sin TaxesAlex Rees-Jones and Kyle RozemaTaxes change behavior. But how does this change arise? In traditional economic models, change is achieved through the price channel: assuming all else is held constant, taxes increase prices and thus decrease demand. However, the assumption that all else is held constant may be violated in the course of a change in tax law, in part because the process by which laws are changed often involves the provision of information, attempts at persuasion, and the deployment of alternative dissuasive tools. Although one may expect these alternative channels to be important, relatively little empirical work measures the relative importance of them compared to a tax’s direct financial influence.In this article, we study the importance of nonprice factors in a particular policy domain: discouraging smoking with cigarette taxes. Examining state-level cigarette tax changes occurring between 1989 and 2009, we document the time paths of tobacco-industry-related political donations, antismoking appropriations, cigarette-related news headlines, and legislation of place-based smoking restrictions. We find that these nonprice factors are changing during windows when tax changes occur. To explore how this evolution of nonprice factors matters for estimates of behavioral change, we make use of information on the cigarette consumption of new mothers reported in the Vital Statistics Detailed Natality Data. In this population, we conduct common analyses that measure the degree to which cigarette consumption responds to the increase in cigarette taxes in the window around a tax change. We find that controlling for nonprice factors substantially reduces the estimated responsivity of consumption to tax changes. In addition, because these nonprice factors evolve in advance of a tax change, they can generate a decrease in consumption in advance of the actual tax-induced price change. This anticipatory decline in consumption closely resembles that predicted by “rational-addiction” motives, but it is derived from a different underlying behavioral model.Taken together, our results suggest an important role of nonprice factors in understanding the evolution of cigarette consumption that occurs around a tax change. We conclude by discussing the implications of our results for forecasting the expected effects of tax policies and for assessing estimates of sin-tax elasticities.Revealing Values: Applying the Inverse-Optimum Method to Us State TaxesRobert EmbreeSystems of tax rates represent a major mechanism by which societies implement their social preferences about inequality and redistribution. Observing different income tax rates in two jurisdictions may be a
{"title":"Summaries of Articles","authors":"","doi":"10.1086/724863","DOIUrl":"https://doi.org/10.1086/724863","url":null,"abstract":"Previous articleNext article FreeSummaries of ArticlesSummaries of ArticlesPDFPDF PLUSFull Text Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinked InRedditEmailQR Code SectionsMorePrice Isn’t Everything: Behavioral Response Around Changes In Sin TaxesAlex Rees-Jones and Kyle RozemaTaxes change behavior. But how does this change arise? In traditional economic models, change is achieved through the price channel: assuming all else is held constant, taxes increase prices and thus decrease demand. However, the assumption that all else is held constant may be violated in the course of a change in tax law, in part because the process by which laws are changed often involves the provision of information, attempts at persuasion, and the deployment of alternative dissuasive tools. Although one may expect these alternative channels to be important, relatively little empirical work measures the relative importance of them compared to a tax’s direct financial influence.In this article, we study the importance of nonprice factors in a particular policy domain: discouraging smoking with cigarette taxes. Examining state-level cigarette tax changes occurring between 1989 and 2009, we document the time paths of tobacco-industry-related political donations, antismoking appropriations, cigarette-related news headlines, and legislation of place-based smoking restrictions. We find that these nonprice factors are changing during windows when tax changes occur. To explore how this evolution of nonprice factors matters for estimates of behavioral change, we make use of information on the cigarette consumption of new mothers reported in the Vital Statistics Detailed Natality Data. In this population, we conduct common analyses that measure the degree to which cigarette consumption responds to the increase in cigarette taxes in the window around a tax change. We find that controlling for nonprice factors substantially reduces the estimated responsivity of consumption to tax changes. In addition, because these nonprice factors evolve in advance of a tax change, they can generate a decrease in consumption in advance of the actual tax-induced price change. This anticipatory decline in consumption closely resembles that predicted by “rational-addiction” motives, but it is derived from a different underlying behavioral model.Taken together, our results suggest an important role of nonprice factors in understanding the evolution of cigarette consumption that occurs around a tax change. We conclude by discussing the implications of our results for forecasting the expected effects of tax policies and for assessing estimates of sin-tax elasticities.Revealing Values: Applying the Inverse-Optimum Method to Us State TaxesRobert EmbreeSystems of tax rates represent a major mechanism by which societies implement their social preferences about inequality and redistribution. Observing different income tax rates in two jurisdictions may be a ","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134949110","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the incentives for countries to implement and maintain the global minimum tax introduced by the G20/OECD’s Inclusive Framework 2021 agreement: Pillar 2. It argues that the agreement has sufficient elements to create incentives for large headquarters countries to implement it. Conditional on them doing so, there is an incentive for host countries to follow suit. The agreement would put a significant floor on tax competition. However, there are caveats to this argument in terms of complexity and the incentive to maintain some provisions that are likely to raise little revenue.
{"title":"International Tax Competition and Coordination with A Global Minimum Tax","authors":"Michael P. Devereux","doi":"10.1086/723198","DOIUrl":"https://doi.org/10.1086/723198","url":null,"abstract":"This paper investigates the incentives for countries to implement and maintain the global minimum tax introduced by the G20/OECD’s Inclusive Framework 2021 agreement: Pillar 2. It argues that the agreement has sufficient elements to create incentives for large headquarters countries to implement it. Conditional on them doing so, there is an incentive for host countries to follow suit. The agreement would put a significant floor on tax competition. However, there are caveats to this argument in terms of complexity and the incentive to maintain some provisions that are likely to raise little revenue.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"145 - 166"},"PeriodicalIF":1.7,"publicationDate":"2023-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46659032","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
More than 20 countries recently adopted digital services taxes, with many others threatening to do so. The Organisation for Economic Co-operation and Development (OECD) is attempting to convince countries to withdraw their digital taxes in return for an international agreement to implement its Pillar One proposal that would let countries tax prorated shares of the profits of foreign firms with local sales. This paper identifies incentives that countries have to impose inefficiently high rates of digital taxes and calls attention to shortcomings of the OECD’s formulary apportionment alternative. Diverging interests and the inflexible nature of the multilateral bargaining process make prospects for global agreement highly uncertain.
{"title":"Digital Tax Arithmetic","authors":"J. Hines,","doi":"10.1086/723179","DOIUrl":"https://doi.org/10.1086/723179","url":null,"abstract":"More than 20 countries recently adopted digital services taxes, with many others threatening to do so. The Organisation for Economic Co-operation and Development (OECD) is attempting to convince countries to withdraw their digital taxes in return for an international agreement to implement its Pillar One proposal that would let countries tax prorated shares of the profits of foreign firms with local sales. This paper identifies incentives that countries have to impose inefficiently high rates of digital taxes and calls attention to shortcomings of the OECD’s formulary apportionment alternative. Diverging interests and the inflexible nature of the multilateral bargaining process make prospects for global agreement highly uncertain.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"119 - 143"},"PeriodicalIF":1.7,"publicationDate":"2023-02-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41406585","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
New York State (NYS) incentivizes cities and towns to merge their Tax Assessor’s Offices while maintaining separate taxing authority. This paper treats cooperative agreements among small tax-assessing jurisdictions in NYS as a natural experiment to explore economies of parcel scale in property assessment. Using 2003–2014 data, we estimate these scale economies using cost-function models with control functions. Our results show consistent evidence of economies of parcel scale, holding quality constant. Local governments can save personnel, operational, and contractual costs by collaborating with nearby localities in conducting property assessments.
{"title":"Returns to Scale in Property Assessment: Evidence from New York State’s Small Localities Coordination Program","authors":"Yusun Kim, Yilin Hou, J. Yinger","doi":"10.1086/723127","DOIUrl":"https://doi.org/10.1086/723127","url":null,"abstract":"New York State (NYS) incentivizes cities and towns to merge their Tax Assessor’s Offices while maintaining separate taxing authority. This paper treats cooperative agreements among small tax-assessing jurisdictions in NYS as a natural experiment to explore economies of parcel scale in property assessment. Using 2003–2014 data, we estimate these scale economies using cost-function models with control functions. Our results show consistent evidence of economies of parcel scale, holding quality constant. Local governments can save personnel, operational, and contractual costs by collaborating with nearby localities in conducting property assessments.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"63 - 94"},"PeriodicalIF":1.7,"publicationDate":"2023-02-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42445102","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper discusses the Organisation for Economic Co-operation and Development’s Two-Pillar proposal for changing the global international corporate tax regime. We focus on the use of financial accounting income as part of these tax rules. We provide a relatively high-level explanation of the rules, and we discuss some inconsistencies and complexities. We also discuss potential problems and unintended consequences for companies, financial statement users, tax authorities, financial statement auditors, and financial accounting standard setters as a result of using financial accounting income in the tax base.
{"title":"The Use of Financial Accounting Information in the OECD BEPS 2.0 Project: A Discussion of the Rules and Concerns","authors":"Michelle Hanlon, Michelle L. Nessa","doi":"10.1086/723199","DOIUrl":"https://doi.org/10.1086/723199","url":null,"abstract":"This paper discusses the Organisation for Economic Co-operation and Development’s Two-Pillar proposal for changing the global international corporate tax regime. We focus on the use of financial accounting income as part of these tax rules. We provide a relatively high-level explanation of the rules, and we discuss some inconsistencies and complexities. We also discuss potential problems and unintended consequences for companies, financial statement users, tax authorities, financial statement auditors, and financial accounting standard setters as a result of using financial accounting income in the tax base.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"193 - 232"},"PeriodicalIF":1.7,"publicationDate":"2023-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49109508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article focuses on Pillar Two’s substance-based income exclusion and illustrates how it is the result of three separate international tax developments that have taken place over the past 15 years. This article argues that by allowing countries to include this exclusion in their minimum taxes, policy makers and politicians have built an escape hatch into Pillar Two that would allow certain jurisdictions to keep their tax rates low, despite headlines proclaiming the end of tax competition.
{"title":"Pillar Two’s Built-In Escape Hatch","authors":"Lilian V. Faulhaber","doi":"10.1086/723200","DOIUrl":"https://doi.org/10.1086/723200","url":null,"abstract":"This article focuses on Pillar Two’s substance-based income exclusion and illustrates how it is the result of three separate international tax developments that have taken place over the past 15 years. This article argues that by allowing countries to include this exclusion in their minimum taxes, policy makers and politicians have built an escape hatch into Pillar Two that would allow certain jurisdictions to keep their tax rates low, despite headlines proclaiming the end of tax competition.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"167 - 192"},"PeriodicalIF":1.7,"publicationDate":"2023-02-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41716609","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The tax systems of different jurisdictions reflect different social preferences about the relative value, or weight, placed on taxes or transfers to each income group. I apply the inverse-optimum income tax method to quantify these preferences by calculating the implied weights for every US state. To capture major features of US state tax systems, I extend the existing theory underlying the inverse-optimum method to include sales taxes, property taxes, and both national and state income taxes. Using Internal Revenue Service data, I calculate effective marginal income tax and commodity tax rates for each state and income level, and use these to find the implied weights for both single and joint filers in each income group in every US state. I observe substantial differences in social preferences across states, and I find weights that decline little above $100,000 and that do not decrease monotonically as might be expected from most theories of social welfare.
{"title":"Revealing Values: Applying the Inverse-Optimum Method to US State Taxes","authors":"Robert A. Embree","doi":"10.1086/723206","DOIUrl":"https://doi.org/10.1086/723206","url":null,"abstract":"The tax systems of different jurisdictions reflect different social preferences about the relative value, or weight, placed on taxes or transfers to each income group. I apply the inverse-optimum income tax method to quantify these preferences by calculating the implied weights for every US state. To capture major features of US state tax systems, I extend the existing theory underlying the inverse-optimum method to include sales taxes, property taxes, and both national and state income taxes. Using Internal Revenue Service data, I calculate effective marginal income tax and commodity tax rates for each state and income level, and use these to find the implied weights for both single and joint filers in each income group in every US state. I observe substantial differences in social preferences across states, and I find weights that decline little above $100,000 and that do not decrease monotonically as might be expected from most theories of social welfare.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"37 - 61"},"PeriodicalIF":1.7,"publicationDate":"2023-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48284607","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A common critique of nonrefundable tax credits is that benefits are limited for low-income households. Costs often dominate the refundability debate, yet how much households benefit from refundability depends on the incidence of the credit in question. California provides a unique opportunity to study how eliminating refundability of child care tax credits affects child care prices while holding other policy dimensions fixed. Using county-level price and tax return data, this study finds that nonrefundability corresponds with lower child care prices. If the price response is symmetrical and quality adjustments are limited, refundability may benefit low-income families less than the cost of the program would suggest.
{"title":"Tax Credit Refundability and Child Care Prices: Evidence from California","authors":"L. Rodgers","doi":"10.1086/723229","DOIUrl":"https://doi.org/10.1086/723229","url":null,"abstract":"A common critique of nonrefundable tax credits is that benefits are limited for low-income households. Costs often dominate the refundability debate, yet how much households benefit from refundability depends on the incidence of the credit in question. California provides a unique opportunity to study how eliminating refundability of child care tax credits affects child care prices while holding other policy dimensions fixed. Using county-level price and tax return data, this study finds that nonrefundability corresponds with lower child care prices. If the price response is symmetrical and quality adjustments are limited, refundability may benefit low-income families less than the cost of the program would suggest.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"76 1","pages":"95 - 116"},"PeriodicalIF":1.7,"publicationDate":"2023-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49376174","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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