Index
A
Actual tax systems
accounting methods, 414
benefit principles, 460–461
characteristics, 446
first order approximation, 398–399
individual incomes, 395–396
of OECD countries, 394–395
policy debates, 446
vs. optimal tax system, 407, 459
Administration and compliance, 52, 54
Adverse selection
vs. advantageous selection, 125–127
annuity markets, 132
defined, 128
equilibrium, 118
evidence of, 131–134
key feature, 119, 121
marginal cost, 120
policy analysis, 123, 185
private market and, 140–141, 168–169, 176
tax subsidies, 121
testing, assymmetric information, 128
underinsurance and, 120
welfare costs of, 115, 120–122, 134, 138
Agglomeration
advantages, 301
capital base, 301–302
economies, 206–207, 216–217, 244
stock effects, 301
Alternatives to welfarism
compensation principles, 461
equal opportunity principle, 462
generalized social welfare weights, 463
libertarianism, 460–461
Pareto Principle, 459–460
Rawlsian Criterion, 460
responsibility principles, 461
Asking, for charity, power of, 32, 37
Atkinson-Stiglitz Theorem
estate taxation, 352
social welfare program, 446
supplementary commodity taxation, 446
Audience effect
public broadcasting, 31
television commercial, 3–4
B
Bequest motives
accidental, 340–341
behavioral responses, 377–378
empirical observation on, 381
intentional, 340
intergenerational links, 339
normative issues, 341
single generation, 337
types, 350–351
Budget constraint
for individual givers, 16
utility function, 3
Bundled donation and consumption, 43
C
Capital gains taxation
carryover basis, 334–335
death and, 360–361, 364
gifts and, 366–367
implementation features, 330–331, 358–359
timing of, 363
unrealization of, 375
Carnegie conjecture, 369–370
Charitable foundations
in Canada, 8
Clinton Global Initiative (CGI) as, 9
endowments of, 13
share of giving, 7
strategic interactions of, 3
tax laws for, 8–9
tax versus non-tax returns, 23, 25–26
tax-deductible donations, 4
total contributions in 2010, 6, 9–10
in U.S., 8
Charitable giving
adult habits, 42
asking, avoidance of, 37
by for-profit company, 43
charity auctions, 39
conscious and unconscious responses, 4
country differences, 5
to disasters, 42
individual economic decision, 3
motivational crowding, 40
peer pressure, 41
primary properties, 2
religious and non-religious aspects, 41–42
social exchange, 3–4
strategic interaction, 3
Charities Aid Foundation, 5
Charity auctions, 39
Cities
crime rates, 201, 207, 211–212, 228–229, 231, 243
deferred compensation, 241
factor mobility, 196
health care, 197, 209, 240
investments, 241
poverty rates, 207
public hospitals in, 209, 240
water management, 198–199, 205, 230–232, 244
City councils, 247–248
City mayors, 242, 247–248
Crime rates, 201, 207, 211–212, 228–229, 231, 243
Common consolidated corporate tax base (CCCTB), 314
Consumption-smoothing effects, 144, 149, 150–151, 155, 163, 166–167, 174, 181, 183
Corporate giving, 7, 43
Corporate tax rates, 258, 260, 288–289, 312, 314
Corruption, 94–95, 97–98
D
Deferred compensation, 241, 246
Direct taxation, 330–331
Disability insurance
in Canada, 152–153
empirical evidence, lack of, 182–183
externalities, 170
labor force participation, 151, 158
risk factors, 134, 154–155
in U.S., 171
welfare consequences, 183
E
Economic development
fiscal capacity and, 74
taxation, 53
Entrepreneurship, positive effect, on taxation, 371
Estate taxation
Atkinson-Stiglitz theorem, 352
charitable bequests, 332, 374, 376, 379
distributional implications, 376–377
during death, 330, 364–365
externalities from giving, 347
and gift tax, 366
giving externalities, 349
inheritance and, 354, 369, 371
linear analysis, 353
liquidity constraints, 371
mortality risk, 363
of living population, 365
optimal formula, 352
rate of return, 362–363
redistributive context, 344, 350
size of estate, 360
tax payers decision, 359–360
wealth distribution and, 332–333, 380
Education investment, 196–197, 199, 202, 228, 230, 232, 235
Elections, 246–248
public sector unions, role in, 248
Emotional appeal, on disaster, 3–4
Endogenous wages, 454
Endowments, 8–9, 13, 17, 28
Exogenous income, 369–370
F
Family taxation, 450
children, 452
couples, 450
Family firms, positive effect, on taxation, 371
Fiscal capacity
components of, 102–103
costs of, 66
creation, 52, 72
endogenous analysis, 52, 76
first order conditions, 72–73
formal, 97–98
government’s motives, 55–56, 61–62, 69
income inequality, 89
indicator, 60–61
informal, 97
investments in, 54–59, 72
public spending, 71
time-series comparison, 57–58
types of, 75, 89–90
Foreign direct investment
bidding for firms (by countries), 302–304
external benefits, 303
indigenization effect, 282
residence principle in, 266
Formula apportionment, source taxation, 314
Fundraising
bundled donations and consumption, 43
charity auctions, 39
donors class, 44
for disasters, 42
giver’s mind, 34
giving habits, 41
institutional philanthropy, 44
Internet’s role in, 45
issues, 41
leadership givers and, 19
matching grants, 21
models, 26
motivational crowding, 40
peer pressure, 41
role of charity in, 25
rule of thumb, 18–19
social pressure, 36–37
society’s benefit, 38
strategic interaction, 3, 44
G
Giver’s mind, 34
asking, avoidance of, 37
fundraising effects, on society, 39
social costs and pressure, 36
see also Willingness to give
GDP percapita, Penn World Tables, 58–59
H
Health care, 197, 209, 240
Housing
policies, 236, 238
quality, 216–218, 220, 224
taxes, 216–217, 219–220, 223, 225–227
Housing taxes, 216–217, 219–220, 223, 225–227
Human capital, 207–216, 224–225, 227
I
Income shifting
distributional reasons, 419, 421
finite and infinite elasticity, 420
labor income, 419–420
negative, 420
sources of income, 419
Income tax
compliance issues, 75–76
fiscal benefits of, 77
in developed countries, 71
introduction, effects on, 75
large-scale compliance, 56–57
time-series pattern, 59–60
Individual giving
data analysis of, 12
households role in decision making, 14
leadership gifts, 18
preferences, 11
price experiments on, 16
salient factors, on incentives, 21
Save More Tomorrow, 20
Information exchange
divergence of interests, 309
harmful impact, 307
residence principle, 307
tax competition and coordination, 302
tax havens, closing down, 313–314
Infrastructure investment, 232, 243–244
cost-benefit analysis, 244
Inheritance tax, 330–331, 333, 359, 371, 378–379
see also Carnegie conjecture
accounting methods, 351
on labor supply, 368
In-kind transfers
benefits of, 448
non-cash benefits, 448–449
International tax competition
endogenous savings, 297
governance structure, impact on, 284
in preferential regimes, 304
infinitely repeated games, 295
internal governance structure, 286–287
Kanbur-Keen (1993) Mode, 274
multiple instruments of, 283
partial list, 258
policies, 260
portfolio diversification, 281
profit shifting in, 313
sequential decision making, 277–278
statutory rates, 260
theoretical perspectives, 260
time consistency, 297
uncoordinated actions, impact on, 262
welfare perspectives, 317, 320
K
Kanbur-Keen model, tax base, 274
L
Labor income, 64, 69–71, 88, 105–106
Labor supply concepts
Envelope theorem, 410
extensive margin, 409
intensive margin, 408
tax reform welfare effects, 410
Land taxes, 219–220, 222, 224–225, 233
Land use, 203, 211, 222
Leadership gifts
by fundrisers, 18–19
individual givers, 18
large donors, 29
matching grant, 20
Local governments
budget rules, 241–242
central tasks of, 195–197
decentralization effects, 212
during recession, 197, 235
failures, reasons for, 214
functional authorities, 196, 199
hospitals and, 240–241
independent budgets, 240
institutions of, 246–247
intertemporal aspects, 250
local taxes, 237
operating deficits, 241, 243–244
property tax, 233
public services, provision of, 196
redistribution and incentives, 235
schooling and, 243
spending, 199, 204
and finances, 216
in US, 196
total revenues, 234
M
Market sectors
econometric evidence, 23
field experiments, 26–27
supply side theories, 22
Matching illusion, 16–18
Migration
poverty traps, 248
redistribution and, 236
Minimum wages, labor market, 456
Mobility
local governments and, 196
local spending, impact on, 158, 227
Ramsey rule, 197
social welfare services, 197, 236
urban governments and, 196, 248
Motivational crowding, 40
Municipalities, 241
N
Nash equilibrium
first-order condition, 268–269, 281–282
in preferential regimes, 305–306
iso-welfare curves, 272, 278
Kanbur-Keen model, 274–275, 288
non-cooperative tax rate, 293, 295–297
Pareto effect in, 269, 287, 290, 295–296
reply functions, 278, 289–290
social optimality properties, 268–269
New Deal, 197, 213–214, 237–239, 249
No Child Left Behind Act, 235
Non-tax revenues, 95
O
Optimal income taxation
history, 401
issues, 354
relative income concerns, 453
Optimal labor income tax theory, 454
Optimal linear taxation
basic model, 410
formula, 413
median voter model, 414
random earnings, 413
rate, 411–412
revenue maximizing rate, 411
Optimal nonlinear schedule
continuous model of Mirrlees, 434
discreet models, 438
marginal tax rate, 436
numerical simulation, 437
top rate, marginal tax, 437
Optimal nonlinear taxation
cross-country evidence, 432
government schedule, 421
international migration, impact on, 428
international mobility, 430–431
intutive derivation, 421
micro level reforms, 430
rent-seeking effects, 425
standard model, 422
time-series evidence, 432
top rate, 422–423
trickle up and down rate, 427–428
Optimal transfer profiles
extensive margin responses, 441
intensive margin responses, 439
Mirrlees model, 439–440
policy practices, 443
Optimal transfers in recessions
education policies, 458
unemployment insurance (US), 457
P
Penn World Tables (GDP percapita), 58–59
Political economy
centralized decision making, 317
decentralized decision making, 317
tax competition, 317
voter’s choice (tax rate), 319
Political forces, fiscal policies, 80
Political institution, investment in fiscal capacity, 54–55
Preferential regimes, 304–305, 320
Price elasticity of giving
individual tax returns, 12
private donations, 4
tax policies, government, 12–13
Privatization, 164, 231, 249
Profit-shifting
capital allocation, 284, 299–300, 312
formula apportionment, 316
international tax competition, 274, 313
manipulation of, 277
by multinationals, 260–261, 276
tax arbitrage, 310
Public funds, marginal value, 72
Public hospitals, 209, 240
Public spending
optimal level, 71
values, 91
R
Ramsey rule, 197, 220
Rawlsian criterion
social welfare programs, 441, 460
welfarism, alternatives to, 460
Recession 2007, 197, 215, 235, 241–244
Revenue authorities, 105
S
Sales taxes, 201–203, 231, 234, 245
second welfare theorem
equity-efficiency trade off, 406
failure reasons, 407
optimal income tax approach, 392–393
standard utilitarian welfare approach, 394
Social act of giving
audience effects, 31
power to ask, 32
socioeconmic factors, 33
Social costs, 36, 229, 232, 245
Social exchange, on-air campaign, 3–4
Social insurance
adverse selection, 134
aggregate risks in, 141
behavioral response, 151, 175–176
challenges, research, 139
consumption-smoothing, 148–150
distortionary substitution effect, 158
duration, 180
dynamic models, 163
empirical work on, 112–114
examples, 140
expenditures, 112
externalities, 142, 168, 170, 172
motivation factors, 140, 142
optimizing behavior, 143–145, 163
policy dimensions, 176, 178
private markets, impacts on, 112–113, 139–140
static model, 145
structural approach, 143
welfare gains, 114–115, 162, 174–175
Social optimality, 267–268, 270
Social pressure, 36
Social security programs, 144–145, 183
Source taxation, 266, 316
Social welfare programs, 24–26, 35, 39, 214
Atkinson-Stiglitz Theorem, 446
behavioral response, 440–441
earning distribution, 411–412
externalities, 453
general factors, 405–406, 411, 464
government budget constraints, 392
in-work benefits, 443
low income workers, 443
marginal utility of consumption in, 405, 412–413, 459
marginal weight, 406, 463, 466–467
maximization of, 401–402, 421, 465–466
means-tested, 444–445
optimal income tax, 392–393, 414
policy debates, 400
random earnings, 413
Rawlsian criterion, 441, 460
standard utilitarian approach, 393–394, 404, 412
tagging, 445
Sorting of people, 215–216, 246, 248–249
Statutory taxes, 18, 63–65, 67–68
Supplementary commodity taxation
Atkinson-Stiglitz Theorem, 446
common forms, 446
heterogeneous preferences, 447
T
Take-up costs, 455
Taxable income, 6, 12–13, 266, 283–284, 313–314, 360–361
Taxation
compliance issues, 64–66
design in developing countries, 53
economic features, 56
income elasticity, 70–71
labor income, 63–64
optimum level, 69–70
patterns, 51
perception, 98
policy problems, 68
political environments, 52–53, 61–62
role in public finance, 52, 56
statutory vs. actual rate, 60–61
structural characteristics, 53
technical issues, in compliance, 55
time-series comparison, 58, 60
types, 59
Tax authorities, 79–80, 99, 104, 105
Tax avoidance
defined, 417
econometric evidence, 381–382
evasion and, 374
general optimum formula, 418
making investments for, 330–331
opportunities, 366
partial optimum formula, 418
responses to, 372
strategies, 374–376, 380
terminal illness and, 372–373
US model for combating, 333
varieties, 419
Tax bases
compliance issues, 61–62, 71
corporate income, 258
cost function, 65
of developing countries, 71
elasticity difference, 305–306
first-order condition, 75
fiscal capacity of, 67
formal and informal, 97–98
government decision, impact on, 73, 88–89
in preferential regimes, 304–306
introduction effects, 76
mobile capital, 283
optimality, 69
partial overlapping, 284
political contexts, 261–262
profit shifting, 277
Ramsey-rule, 69
social norms, 99
spillover effects, 100
third-order discrimination, 302
utility function, 69, 73
Tax collection, 58, 70, 98, 101, 106
Tax compliance
endogenous factors, 104
evasion model, 99
fiscal capacity, 74
local information, 102–103
of legal business sectors, 79
political instability, 86
social norms, 99
taxation and, 64
technical issues, 55
war finance, 91–92
Tax evasion, 65, 68, 75, 79–80, 99–100
Tax haven
closing down, 313–314
defined, 310
international competition, 311
vs. nonhavens, 310
Tax incentives, 359–361, 369, 373, 381
Tax inspectors, 100–102
Taxpayers
charitable deduction, impact on, 21
direct incentives, 12–13
gift aid, 13–14
Tax planning, 332, 362, 367, 372, 374, 380
Traffic congestion, 210, 219–220
Transfer taxation
behavioral responses, 359–360
dimensions, 330–331
distortion magnitude, 361
efficiency cost, 368
of gifts, 330, 360–361
implementation, 335–336
single generation effects, 337
valuation issues, 336
Transportation investment, 197–199, 207–208, 210, 213–215, 232, 244–245
U
Unemployment insurance, 134
behavioral responses, 152–153
benefits of, 167
in Chile, 178
consumption smoothing, impact on, 149
crowdout effects, 170
duration, 151
empirical evidence, lack of, 182–183
government intervention in, 185
labor supply and, 151
optimal model, 163, 173–174, 177
social insurance program, 152–153, 170
static model, 145
social security analysis, 144–145
static model, 145
in U.S. 112, 150
Urban externalities (U.S.), 195–197, 199, 207, 209–210, 219
Urban government
agglomeration theories, 205
externalties, provision, 208
operating expenditures, 246
political economics, 246
public transits and, 207
welfare policies, 237
Urban political economy, 246, 249–250
Urban public finance
empirical findings, 205
features of, 196
intertemporal aspects, 241
redistribution elements, 236
theory of, 204–205
Urban services
financing for, 215–216, 228
levels, 228
privatizations of, 231
redistribution policies, 197, 236
User fees, 198–199, 201, 228, 231, 243–244
Utility function, 3, 28–29, 37
V
Values, public spending, 91
Voter’s choice (tax rate), 319
W
Wage taxes, 203, 234
Water management, 198–199, 205, 230–232, 244
Welfarist approach
alternatives, 459
issues, 459
Wealth taxes
administrative difficulties, 336
in developed countries, 333
in developing countries, 333
distortion magnitude, 361
features of, 330–331
as revenue source, 333
US tax code, 344
zero rate, 358
Willingness to give, 27–29, 31, 35–36, 40–41, 43
Workfare, 455
Worker’s compensation, adverse selection, 134
Workhorse (ZMW) model, 262, 274, 278, 281, 295–297, 317
Z
Zero tax, 301, 310, 312–313
ZMW model. see Workhorse (ZMW) model
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