We consider a political economy with two partisan parties; each party represents a given constituency of voters. If one party (Labour) represents poor voters and the other (Christian Democrats) rich voters, if a redistributive tax policy is the only issue, and if there are no incentive considerations, then in equilibrium the party representing the poor will propose a tax rate of unity. If, howe...

Computable general equilibrium (CGE) modeling has provided a number of important insights about the interplay between environmental tax policy and the pre-existing tax system. In this paper, we emphasize that a labor market policy of recycling tax revenues from an environmental tax to lower employers’ non-wage labor cost depends on how the costs of labor are modeled. We propose an approach, whi...

The Statute for Upgrading Industries (SUI) applies tax incentive, subsidies, and supporting measures to assist companies with industrial and technological activities, and the SUI is considered as one of Taiwan’s key industrial technology policies. In the SUI, investment tax credits for R&D, personnel training, automation activities receive the highest share of tax credits, is the most important...

A carbon tax is a promising tool for discouraging the greenhouse gas emissions that cause climate change. In principle, a well-designed tax could reduce the risk of climate change, minimize the cost of emissions reductions, encourage innovation in low-carbon technologies, and raise new public revenue. But designing a real-world carbon tax poses significant challenges. We analyze those challenge...

Differential property tax policy for farmland is often set under conditions of uncertainty and limited information regarding landowners’ objective functions. This study examines optimal differential tax policy for a parcel of agricultural land facing uncertain development, identifying instances in which common farmland taxation policies may be non-optimal. Optimal tax rates are characterized gi...

A theoretical analysis considers the impact of a typical system of redistributive “fiscal equalization” transfers on the taxing effort of local jurisdictions. More specifically, it shows that the marginal contribution rate, i.e. the rate at which an increase in the tax base is reducing those transfers, might be positively associated with the local tax rate while the volume of grants received is...

A theoretical analysis considers the impact of a typical system of redistributive “fiscal equalization” transfers on the taxing effort of local jurisdictions. More specifically, it shows that the marginal contribution rate, i.e. the rate at which an increase in the tax base is reducing those transfers, might be positively associated with the local tax rate while the volume of grants received is...

Taxation and risk taking are examined in a general equilibrium mode/ that incorporates uncertain government revenue and allows the government to influence risk through portfolio investments as well as through tax r policy. It is demonstra ted that each of a wide range of taxes can be decomposed into some combina tion of a wage tax, an ex ante wealth tax, and a modification of the government’s i...

This paper investigates the effect of tax policy on productivity in Taiwanese manufacturing firms for the period 2001 to 2008. We first adopt the dynamic random effect (RE) probit model to analyze the determinants of a firm’s decision as to whether or not to apply for tax credits. The results show that the causal effect from past tax credits usage to current tax credits usage exists across indu...