Pub Date : 2022-09-01DOI: 10.1177/10911421221124577
Alicia Plemmons, Sriparna Ghosh
Local governments compete for new residents by creating institutional frameworks that are attractive to such residents. As 13 percent of the US moves each year, policies that affect the ease of doing business may attract thousands of entrepreneurial and working households. We use city-level aggregated migration data from the American Community Survey and Internal Revenue Service to analyze changes in net migration between cities that differ in the ease of starting a business, employing workers, getting electricity, registering property, and paying taxes. Expansions in the flexibility of regulatory processes that affect workers multiple times, such as ease of employing workers or filing taxes, have large effects in encouraging in-migration. In contrast, improvements in policies that only affect new workers or business owners temporarily, such as ease of installing utilities or registering property, do not have a noticeable effect on migration patterns.
{"title":"Business Regulations and Between-City Migration","authors":"Alicia Plemmons, Sriparna Ghosh","doi":"10.1177/10911421221124577","DOIUrl":"https://doi.org/10.1177/10911421221124577","url":null,"abstract":"Local governments compete for new residents by creating institutional frameworks that are attractive to such residents. As 13 percent of the US moves each year, policies that affect the ease of doing business may attract thousands of entrepreneurial and working households. We use city-level aggregated migration data from the American Community Survey and Internal Revenue Service to analyze changes in net migration between cities that differ in the ease of starting a business, employing workers, getting electricity, registering property, and paying taxes. Expansions in the flexibility of regulatory processes that affect workers multiple times, such as ease of employing workers or filing taxes, have large effects in encouraging in-migration. In contrast, improvements in policies that only affect new workers or business owners temporarily, such as ease of installing utilities or registering property, do not have a noticeable effect on migration patterns.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"579 - 596"},"PeriodicalIF":0.7,"publicationDate":"2022-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44447834","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-01DOI: 10.1177/10911421221124561
S. Yen, Ernest M. Zampelli
This paper examines attitudes toward taxes on the rich and middle class in the United States with emphasis on the impacts of political ideology and party identification. Using the 2016 General Social Survey, we estimate bivariate ordered probit models for a full cross-sectional sample, and subsamples stratified by party. Results suggest that proposals to reduce income and wealth inequalities and/or fund large federal expenditure increases by raising taxes on the rich will have difficulty in gaining the political traction necessary for success. Any proposal to raise taxes on both the rich and middle class has almost no chance of passage. Findings also indicate that party affiliation moderates ideological impacts on opinions of taxes on the rich and middle class, in some cases substantially.
{"title":"Ideology, Party, and Opinions of Taxes on the Rich and Middle Class in the United States: Evidence from the 2016 General Social Survey","authors":"S. Yen, Ernest M. Zampelli","doi":"10.1177/10911421221124561","DOIUrl":"https://doi.org/10.1177/10911421221124561","url":null,"abstract":"This paper examines attitudes toward taxes on the rich and middle class in the United States with emphasis on the impacts of political ideology and party identification. Using the 2016 General Social Survey, we estimate bivariate ordered probit models for a full cross-sectional sample, and subsamples stratified by party. Results suggest that proposals to reduce income and wealth inequalities and/or fund large federal expenditure increases by raising taxes on the rich will have difficulty in gaining the political traction necessary for success. Any proposal to raise taxes on both the rich and middle class has almost no chance of passage. Findings also indicate that party affiliation moderates ideological impacts on opinions of taxes on the rich and middle class, in some cases substantially.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"558 - 578"},"PeriodicalIF":0.7,"publicationDate":"2022-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44375555","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-01DOI: 10.1177/10911421221125150
M. Petutschnig, Silke Rünger
We contribute to the empirical literature on the debt bias of corporate income taxation through a firm-level evaluation of the allowance for corporate equity (ACE) in Austria. We find that the Austrian ACE tax system increased corporate equity ratios by approximately 1.36 to 2.30 percentage points. Additionally, we find significant differences in the application of the ACE tax system depending on firm-specific dividend levels and firm-specific ownership structures. In particular, we find that the cost of constraining dividends appears to be higher than the tax benefit of the ACE tax system. Additionally, we find that firms with dispersed ownership refrain from applying the ACE tax system, which might be due to the fact that firms with less dispersed ownership can react more quickly to tax law changes.
{"title":"The Effect of an Allowance for Corporate Equity on Capital Structure: Evidence From Austria","authors":"M. Petutschnig, Silke Rünger","doi":"10.1177/10911421221125150","DOIUrl":"https://doi.org/10.1177/10911421221125150","url":null,"abstract":"We contribute to the empirical literature on the debt bias of corporate income taxation through a firm-level evaluation of the allowance for corporate equity (ACE) in Austria. We find that the Austrian ACE tax system increased corporate equity ratios by approximately 1.36 to 2.30 percentage points. Additionally, we find significant differences in the application of the ACE tax system depending on firm-specific dividend levels and firm-specific ownership structures. In particular, we find that the cost of constraining dividends appears to be higher than the tax benefit of the ACE tax system. Additionally, we find that firms with dispersed ownership refrain from applying the ACE tax system, which might be due to the fact that firms with less dispersed ownership can react more quickly to tax law changes.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"597 - 642"},"PeriodicalIF":0.7,"publicationDate":"2022-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45233041","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-08-24DOI: 10.1177/10911421221114203
Michael Breen, Robert Gillanders
Does corruption ease the burden of regulation? We test this question using survey data on business managers’ experience in dealing with regulation and corruption. We find that there is substantial within-country variation in the burden of regulation and that corruption is associated with worse regulatory outcomes across a range of indicators at the country, national, and firm level. These findings suggest that corruption is associated with an increase in the burden of regulation, and imposes large costs on businesses. While corruption is associated with an increased burden of regulation, this does not seem to happen through an increase in how much time senior managers must devote to regulation, suggesting that the cost of corruption-induced regulation manifests in the form of additional staff costs or professional fees.
{"title":"Corruption and the Burden of Regulation: National, Regional, and Firm-Level Evidence","authors":"Michael Breen, Robert Gillanders","doi":"10.1177/10911421221114203","DOIUrl":"https://doi.org/10.1177/10911421221114203","url":null,"abstract":"Does corruption ease the burden of regulation? We test this question using survey data on business managers’ experience in dealing with regulation and corruption. We find that there is substantial within-country variation in the burden of regulation and that corruption is associated with worse regulatory outcomes across a range of indicators at the country, national, and firm level. These findings suggest that corruption is associated with an increase in the burden of regulation, and imposes large costs on businesses. While corruption is associated with an increased burden of regulation, this does not seem to happen through an increase in how much time senior managers must devote to regulation, suggesting that the cost of corruption-induced regulation manifests in the form of additional staff costs or professional fees.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":" ","pages":""},"PeriodicalIF":0.7,"publicationDate":"2022-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44859305","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-01DOI: 10.1177/10911421221109061
Mikael Elinder, Johannes Hagen, Mattias Nordin, Jenny Säve-Söderbergh
Recent pension reforms have shifted a larger responsibility towards savers. Individuals therefore need better knowledge of the rules and incentives embedded in the pension system to adequately save and prepare for retirement. In this paper, we use a novel Swedish survey matched with high-quality administrative data to show that many lack, and feel that they lack, such pension-specific knowledge. We also show that the most economically vulnerable groups know the least. Linking pension knowledge to behavior, we find that knowing less is associated with lower preparedness for retirement, even after controlling for financial literacy and subjective knowledge. Moreover, a large majority state the complexity of the pension system, or that they have planned to learn more about pensions but that it just hasn’t happened, as reasons for why they do not have sufficient knowledge.
{"title":"Who Lacks Pension Knowledge, Why and Does it Matter? Evidence From Swedish Retirement Savers","authors":"Mikael Elinder, Johannes Hagen, Mattias Nordin, Jenny Säve-Söderbergh","doi":"10.1177/10911421221109061","DOIUrl":"https://doi.org/10.1177/10911421221109061","url":null,"abstract":"Recent pension reforms have shifted a larger responsibility towards savers. Individuals therefore need better knowledge of the rules and incentives embedded in the pension system to adequately save and prepare for retirement. In this paper, we use a novel Swedish survey matched with high-quality administrative data to show that many lack, and feel that they lack, such pension-specific knowledge. We also show that the most economically vulnerable groups know the least. Linking pension knowledge to behavior, we find that knowing less is associated with lower preparedness for retirement, even after controlling for financial literacy and subjective knowledge. Moreover, a large majority state the complexity of the pension system, or that they have planned to learn more about pensions but that it just hasn’t happened, as reasons for why they do not have sufficient knowledge.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"379 - 435"},"PeriodicalIF":0.7,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46158151","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-01DOI: 10.1177/10911421221107426
Ryan H. Murphy
Which countries have the world's smallest and the world's largest governments? One-fifth of the Economic Freedom of the World index is a subindex scoring the size of government for countries across the world. This subindex is inclusive of the three dimensions of government spending, the top marginal tax rate, and the government ownership of the economy. Measured in this manner, the “smallest” governments are, generally, weak or fragile states. This paper recognizes Wagner's law, the empirical regularity that wealthier countries tend to spend more as a percentage of gross domestic product (GDP). It then performs a novel adjustment to the size of government data to account for Wagner's law, re-scores and re-ranks the countries, and explores the results.
{"title":"Breaking Wagner's Law: Which Countries Have the Most Limited Government?","authors":"Ryan H. Murphy","doi":"10.1177/10911421221107426","DOIUrl":"https://doi.org/10.1177/10911421221107426","url":null,"abstract":"Which countries have the world's smallest and the world's largest governments? One-fifth of the Economic Freedom of the World index is a subindex scoring the size of government for countries across the world. This subindex is inclusive of the three dimensions of government spending, the top marginal tax rate, and the government ownership of the economy. Measured in this manner, the “smallest” governments are, generally, weak or fragile states. This paper recognizes Wagner's law, the empirical regularity that wealthier countries tend to spend more as a percentage of gross domestic product (GDP). It then performs a novel adjustment to the size of government data to account for Wagner's law, re-scores and re-ranks the countries, and explores the results.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"484 - 509"},"PeriodicalIF":0.7,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42717873","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-01DOI: 10.1177/10911421221113842
Vincent Vergnat, C. D’Ambrosio, P. Liégeois
This article studies the distribution of income in Luxembourg by integrating two aspects that have been previously neglected: indirect taxation and in-kind transfers. The integration of the latter is essential in Luxembourg, the country with the highest public expenditure per capita in the Organisation for Economic Co-operation and Development (OECD). These issues have been understudied because of some methodological challenges, including the lack of data containing all the necessary information for this type of analysis. However, with the EUROMOD microsimulation model, different data sources, and imputation methods, we are able to obtain a more complete view of the income distribution in Luxembourg. We find that, as in many developed countries, indirect taxes are regressive. On the other hand, in-kind transfers play an important role in reducing income inequality, in particular through education and health services.
{"title":"The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement","authors":"Vincent Vergnat, C. D’Ambrosio, P. Liégeois","doi":"10.1177/10911421221113842","DOIUrl":"https://doi.org/10.1177/10911421221113842","url":null,"abstract":"This article studies the distribution of income in Luxembourg by integrating two aspects that have been previously neglected: indirect taxation and in-kind transfers. The integration of the latter is essential in Luxembourg, the country with the highest public expenditure per capita in the Organisation for Economic Co-operation and Development (OECD). These issues have been understudied because of some methodological challenges, including the lack of data containing all the necessary information for this type of analysis. However, with the EUROMOD microsimulation model, different data sources, and imputation methods, we are able to obtain a more complete view of the income distribution in Luxembourg. We find that, as in many developed countries, indirect taxes are regressive. On the other hand, in-kind transfers play an important role in reducing income inequality, in particular through education and health services.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"436 - 483"},"PeriodicalIF":0.7,"publicationDate":"2022-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47240032","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-01DOI: 10.1177/10911421221097785
M. Alexeev, A. Yushkov
This paper examines the fiscal consequences of the COVID-19 pandemic for subnational governments. In particular, we study how the pandemic affected the Russian regions in terms of budget revenues, expenditures, and federal transfers. We use a novel dataset and compare various monthly fiscal measures in 2020 prior to and during the pandemic to the corresponding measures in 2019, conditioning on regional actions in response to the pandemic, the health impact of the pandemic, and the potentially relevant regional characteristics. We document that small business tax collections declined the most in response to the pandemic-related restrictions, while unconditional discretionary transfers and health care expenditures rose the most. Also, we find that tax collections are positively associated with population mobility, controlling for the restrictions, suggesting that tax revenues were inversely affected by the degree of compliance with the restrictions. Finally, we outline some policy implications for the design of fiscal federalism and directions for future research.
{"title":"The Fiscal Impact of the COVID-19 Pandemic on Subnational Governments: The Case of Russia","authors":"M. Alexeev, A. Yushkov","doi":"10.1177/10911421221097785","DOIUrl":"https://doi.org/10.1177/10911421221097785","url":null,"abstract":"This paper examines the fiscal consequences of the COVID-19 pandemic for subnational governments. In particular, we study how the pandemic affected the Russian regions in terms of budget revenues, expenditures, and federal transfers. We use a novel dataset and compare various monthly fiscal measures in 2020 prior to and during the pandemic to the corresponding measures in 2019, conditioning on regional actions in response to the pandemic, the health impact of the pandemic, and the potentially relevant regional characteristics. We document that small business tax collections declined the most in response to the pandemic-related restrictions, while unconditional discretionary transfers and health care expenditures rose the most. Also, we find that tax collections are positively associated with population mobility, controlling for the restrictions, suggesting that tax revenues were inversely affected by the degree of compliance with the restrictions. Finally, we outline some policy implications for the design of fiscal federalism and directions for future research.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"239 - 278"},"PeriodicalIF":0.7,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45270502","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-01DOI: 10.1177/10911421221101690
Ziyuan Wang, T. Spreen, L. Yang
Feler and Senses assess the impact of trade shocks on local government finances in the United States. They find that increased import competition from China reduces housing prices and business activity in affected regions, which subsequently diminishes property and sales tax collections and the provision of local public goods. We replicate the authors’ published results and find that they are generally robust to alternative sample construction procedures and the removal of analytical weights. We also extend the authors’ methodology to evaluate the impact of trade shocks on local capital outlays, borrowing, and cash reserves. We find that the reduction in local expenditures resulting from Chinese trade exposure is driven in large part by decreased spending on fixed assets and that local governments facing greater import competition experience larger declines in cash and financial investments.
{"title":"A Replication of “Trade Shocks and the Provision of Local Public Goods” (American Economic Journal: Economic Policy, 2017)","authors":"Ziyuan Wang, T. Spreen, L. Yang","doi":"10.1177/10911421221101690","DOIUrl":"https://doi.org/10.1177/10911421221101690","url":null,"abstract":"Feler and Senses assess the impact of trade shocks on local government finances in the United States. They find that increased import competition from China reduces housing prices and business activity in affected regions, which subsequently diminishes property and sales tax collections and the provision of local public goods. We replicate the authors’ published results and find that they are generally robust to alternative sample construction procedures and the removal of analytical weights. We also extend the authors’ methodology to evaluate the impact of trade shocks on local capital outlays, borrowing, and cash reserves. We find that the reduction in local expenditures resulting from Chinese trade exposure is driven in large part by decreased spending on fixed assets and that local governments facing greater import competition experience larger declines in cash and financial investments.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"336 - 376"},"PeriodicalIF":0.7,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48188880","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-05-01DOI: 10.1177/10911421221105519
Nobuo Akai, Tsuyoshi Goto
Mergers of local governments, commonly referred to as municipal mergers, have been widely implemented to internalize spillover effects. Many empirical studies point out that municipalities change the intertemporal budget allocation by increasing their debt issuance before mergers and they consider that this debt issuance is induced by the “fiscal common pool problem” because of pooled budgets after mergers. However, this phenomenon has yet to be analyzed theoretically. Therefore, this paper examines the mechanism of increased debt issuance before municipal mergers. We compare the debt issuance in the merger case with the level in the socially optimal and nonmerger cases. We find that the amount of debt issuance is larger in the merger case than in both other cases. The difference vanishes when spillovers are perfect.
{"title":"The Fiscal Common Pool Problem, Municipal Mergers, and Spillovers","authors":"Nobuo Akai, Tsuyoshi Goto","doi":"10.1177/10911421221105519","DOIUrl":"https://doi.org/10.1177/10911421221105519","url":null,"abstract":"Mergers of local governments, commonly referred to as municipal mergers, have been widely implemented to internalize spillover effects. Many empirical studies point out that municipalities change the intertemporal budget allocation by increasing their debt issuance before mergers and they consider that this debt issuance is induced by the “fiscal common pool problem” because of pooled budgets after mergers. However, this phenomenon has yet to be analyzed theoretically. Therefore, this paper examines the mechanism of increased debt issuance before municipal mergers. We compare the debt issuance in the merger case with the level in the socially optimal and nonmerger cases. We find that the amount of debt issuance is larger in the merger case than in both other cases. The difference vanishes when spillovers are perfect.","PeriodicalId":46919,"journal":{"name":"PUBLIC FINANCE REVIEW","volume":"50 1","pages":"307 - 335"},"PeriodicalIF":0.7,"publicationDate":"2022-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43091216","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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