We examine the relationship between the earned income tax credit (EITC) and Black-White after-tax income inequality from 1980 to 2020. The EITC lowers overall inequality by 5–10 percent in a typical year, improving the incomes of Black households relative to White households in the bottom half of the distribution. Gains in relative economic status emerged after the 1993 EITC expansion, concentrated among working-class Black households, and not extending to those at the very bottom. Estimating the effect of the 1993 expansion on labor supply, we find evidence of a much larger extensive-margin employment response for Black households than White households.
{"title":"Income Inequality, Race, and the EITC","authors":"B. Hardy, Charles M. Hokayem, James P. Ziliak","doi":"10.1086/717959","DOIUrl":"https://doi.org/10.1086/717959","url":null,"abstract":"We examine the relationship between the earned income tax credit (EITC) and Black-White after-tax income inequality from 1980 to 2020. The EITC lowers overall inequality by 5–10 percent in a typical year, improving the incomes of Black households relative to White households in the bottom half of the distribution. Gains in relative economic status emerged after the 1993 EITC expansion, concentrated among working-class Black households, and not extending to those at the very bottom. Estimating the effect of the 1993 expansion on labor supply, we find evidence of a much larger extensive-margin employment response for Black households than White households.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"149 - 167"},"PeriodicalIF":1.7,"publicationDate":"2022-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45497207","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}
Daniel Klein, Christopher Ludwig, Christoph Spengel
This study analyzes investor reaction to the European Commission’s proposals on the taxation of digital firms. Examining the stock returns of potentially affected firms surrounding the proposals’ release, we find a significant abnormal capital market reaction of −0.692 percent. This corresponds to an absolute market value reduction of more than 52 billion euros, 40 percent of which is attributable to US firms. Investor reaction is stronger for firms that engage more in tax avoidance and for those with higher European Union exposure. Overall, investors perceive the event as a threat to digital firms’ future profitability and react in line with the proposals’ intentions to secure tax revenues and to extract location-specific rent.
{"title":"Taxing the Digital Economy: Investor Reaction to the European Commission’s Digital Tax Proposals","authors":"Daniel Klein, Christopher Ludwig, Christoph Spengel","doi":"10.1086/717518","DOIUrl":"https://doi.org/10.1086/717518","url":null,"abstract":"This study analyzes investor reaction to the European Commission’s proposals on the taxation of digital firms. Examining the stock returns of potentially affected firms surrounding the proposals’ release, we find a significant abnormal capital market reaction of −0.692 percent. This corresponds to an absolute market value reduction of more than 52 billion euros, 40 percent of which is attributable to US firms. Investor reaction is stronger for firms that engage more in tax avoidance and for those with higher European Union exposure. Overall, investors perceive the event as a threat to digital firms’ future profitability and react in line with the proposals’ intentions to secure tax revenues and to extract location-specific rent.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"61 - 92"},"PeriodicalIF":1.7,"publicationDate":"2022-02-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43202532","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}
We show that legislative caps on assessment growth are associated with reduced racial inequality in property taxation. These reductions increase in treatment intensity and are largest in highly minority neighborhoods and low-income neighborhoods, which prior work shows are more susceptible to assessment misvaluations. We provide support for two channels explaining this finding. First, conditional on a binding cap, Black and Hispanic homeowners are exposed to slightly higher home-price growth within jurisdiction, which leads to a small mechanical reduction of existing inequality. Second, caps appear to discipline assessor errors by reducing the correlation between neighborhood amenities and erroneously high assessments.
{"title":"Assessment Caps and the Racial Assessment Gap","authors":"Carlos F. Avenancio-León, Troup Howard","doi":"10.1086/717989","DOIUrl":"https://doi.org/10.1086/717989","url":null,"abstract":"We show that legislative caps on assessment growth are associated with reduced racial inequality in property taxation. These reductions increase in treatment intensity and are largest in highly minority neighborhoods and low-income neighborhoods, which prior work shows are more susceptible to assessment misvaluations. We provide support for two channels explaining this finding. First, conditional on a binding cap, Black and Hispanic homeowners are exposed to slightly higher home-price growth within jurisdiction, which leads to a small mechanical reduction of existing inequality. Second, caps appear to discipline assessor errors by reducing the correlation between neighborhood amenities and erroneously high assessments.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"169 - 200"},"PeriodicalIF":1.7,"publicationDate":"2022-02-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42074308","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}
Stephanie Moulton, J. Collins, Cäzilia Loibl, D. Haurin, Julia K Brown
This study is based on a field experiment designed to increase the salience of property tax and insurance payments among a particularly vulnerable population, older adults who took out a reverse mortgage. Homeowners who were randomly assigned to receive mailed letters reminding them about payment obligations missed subsequent payments at one-third lower rates relative to homeowners who were not assigned reminder letters. Those assigned to the reminder letter treatment were also significantly less likely to carry large default balances at the end of the study period, reducing their risk of foreclosure.
{"title":"Property Tax Compliance and Reverse Mortgages: Using Nudges to Improve the Market","authors":"Stephanie Moulton, J. Collins, Cäzilia Loibl, D. Haurin, Julia K Brown","doi":"10.1086/717160","DOIUrl":"https://doi.org/10.1086/717160","url":null,"abstract":"This study is based on a field experiment designed to increase the salience of property tax and insurance payments among a particularly vulnerable population, older adults who took out a reverse mortgage. Homeowners who were randomly assigned to receive mailed letters reminding them about payment obligations missed subsequent payments at one-third lower rates relative to homeowners who were not assigned reminder letters. Those assigned to the reminder letter treatment were also significantly less likely to carry large default balances at the end of the study period, reducing their risk of foreclosure.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"33 - 59"},"PeriodicalIF":1.7,"publicationDate":"2022-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"60724816","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}
Homestead exemption policies are ostensibly intended to reduce the property tax burden of lower-income homeowners. Because assessment rates tend be lower for higher-priced homes, the opposing effects of exemptions and regressive assessments can result in either a regressive or progressive property tax. Using 2018 data on all single-family homes in Florida, we find that in the majority of counties, the homestead exemption dominates regressive assessment, resulting in a progressive tax. We also explore how progressivity would be affected by modifying current features of the property tax, including the homestead exemption take-up rate, the cap on valuation growth, and regressive assessments.
{"title":"Homestead Exemptions, Heterogeneous Assessment, and Property Tax Progressivity","authors":"K. Ihlanfeldt, L. Rodgers","doi":"10.1086/717587","DOIUrl":"https://doi.org/10.1086/717587","url":null,"abstract":"Homestead exemption policies are ostensibly intended to reduce the property tax burden of lower-income homeowners. Because assessment rates tend be lower for higher-priced homes, the opposing effects of exemptions and regressive assessments can result in either a regressive or progressive property tax. Using 2018 data on all single-family homes in Florida, we find that in the majority of counties, the homestead exemption dominates regressive assessment, resulting in a progressive tax. We also explore how progressivity would be affected by modifying current features of the property tax, including the homestead exemption take-up rate, the cap on valuation growth, and regressive assessments.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"7 - 31"},"PeriodicalIF":1.7,"publicationDate":"2022-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48125293","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}
I address some issues in measuring group equity and implicit discrimination and in assessing their role in the evaluation of tax systems, focusing on racial equity in the United States. I argue that group inequity should be judged relative to other accepted objectives of the tax system it may facilitate and stress the importance of having accurate measures of well-being. Finally, I present a decomposition of the difference in groups’ average tax rates into measures of the overall progressivity, group differences in average income, and a set of income-group-specific measures of horizontal group tax differences.
{"title":"Group Equity and Implicit Discrimination in Tax Systems","authors":"J. Slemrod","doi":"10.1086/717960","DOIUrl":"https://doi.org/10.1086/717960","url":null,"abstract":"I address some issues in measuring group equity and implicit discrimination and in assessing their role in the evaluation of tax systems, focusing on racial equity in the United States. I argue that group inequity should be judged relative to other accepted objectives of the tax system it may facilitate and stress the importance of having accurate measures of well-being. Finally, I present a decomposition of the difference in groups’ average tax rates into measures of the overall progressivity, group differences in average income, and a set of income-group-specific measures of horizontal group tax differences.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"201 - 224"},"PeriodicalIF":1.7,"publicationDate":"2022-01-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42792864","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}
US local governments often seek voter approval through bond referenda prior to borrowing. Passing bond referenda increases borrowing authority and potential debt levels, which can influence government credit risk. Focusing on Texas local governments, we estimate the causal effects of bond authorization on credit risk with a regression discontinuity design. Credit risk is measured by the average bond yields of existing debt. For school districts, one standard deviation increase in authorized debt per capita causes bond yields to increase by approximately 9.9–22.5 basis points in the subsequent 12 months. We find no effects for cities and counties.
{"title":"Market Responses To Voter-Approved Debt","authors":"Jinhai Yu, Xin Chen, Mark D. Robbins","doi":"10.1086/716770","DOIUrl":"https://doi.org/10.1086/716770","url":null,"abstract":"US local governments often seek voter approval through bond referenda prior to borrowing. Passing bond referenda increases borrowing authority and potential debt levels, which can influence government credit risk. Focusing on Texas local governments, we estimate the causal effects of bond authorization on credit risk with a regression discontinuity design. Credit risk is measured by the average bond yields of existing debt. For school districts, one standard deviation increase in authorized debt per capita causes bond yields to increase by approximately 9.9–22.5 basis points in the subsequent 12 months. We find no effects for cities and counties.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"75 1","pages":"93 - 119"},"PeriodicalIF":1.7,"publicationDate":"2022-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41318053","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 provides a legal analysis of how barriers for increased gender equality in the labor market can be mitigated through the inclusion of childcare infrastructure, primarily paid parental leave, regulation of maternal and paternal leave, and universal childcare. The five Nordic countries of Sweden, Denmark, Norway, Finland, and Iceland are used as case studies.
{"title":"Childcare Infrastructure in the Nordic Countries as a Way of Enabling Female Labor Market Participation","authors":"Yvette Lind","doi":"10.1086/717077","DOIUrl":"https://doi.org/10.1086/717077","url":null,"abstract":"This paper provides a legal analysis of how barriers for increased gender equality in the labor market can be mitigated through the inclusion of childcare infrastructure, primarily paid parental leave, regulation of maternal and paternal leave, and universal childcare. The five Nordic countries of Sweden, Denmark, Norway, Finland, and Iceland are used as case studies.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"937 - 951"},"PeriodicalIF":1.7,"publicationDate":"2021-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49646575","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}
Mainstream public finance research has largely ignored race issues. This paper calls on public finance economists to explore racial issues more extensively. The obvious reasons are to understand the effects of inequitable and inefficient policies, help develop remedies, and ensure that public finance is addressing the issues most salient to society. The less obvious reason is that public finance has tools and frameworks that can provide useful insights into the economics of racism. As economists search for issues that are both amenable to analysis and important for society, the pervasive effects of racism stand out in both regards.
{"title":"Public Finance and Racism","authors":"W. Gale","doi":"10.1086/717146","DOIUrl":"https://doi.org/10.1086/717146","url":null,"abstract":"Mainstream public finance research has largely ignored race issues. This paper calls on public finance economists to explore racial issues more extensively. The obvious reasons are to understand the effects of inequitable and inefficient policies, help develop remedies, and ensure that public finance is addressing the issues most salient to society. The less obvious reason is that public finance has tools and frameworks that can provide useful insights into the economics of racism. As economists search for issues that are both amenable to analysis and important for society, the pervasive effects of racism stand out in both regards.","PeriodicalId":18983,"journal":{"name":"National Tax Journal","volume":"74 1","pages":"953 - 974"},"PeriodicalIF":1.7,"publicationDate":"2021-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48535869","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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