The poverty impact of indirect tax reforms is analyzed using sequential stochastic dominance methods. This allows agents to differ in dimensions that cannot always be precisely captured within the usual money-metric indicators of living standards. Examples of such dimensions include household size and composition, temporal or spatial variation in price indices, and individual needs and “merits”.

The manipulation of transfer prices changes the relative tax burdens multinational firms face in their different countries of operation and may even reduce a firm’s worldwide tax payments. At the same time, transfer price manipulation will often trigger changes in the tariffs that are levied on intra-company imports. For this reason, when tax rates change, as they did for many countries during ...

This paper examines the optimal schedule of marginal tax rates and the design of earned income tax credits. The analysis is based on a structural labour supply model which incorporates unobserved heterogeneity, fixed costs of work and the detailed non-convexities of the tax and transfer system. An analytical framework is developed that allows explicitly for an extensive margin in work choices a...

The UK economy growing annually at 2.05 percent and leading the world between 1750 and 1850 experienced a sharp rise in income inequality at the high point of the industrial revolution. A series of tax and transfer enactments from the parliament to protect workers and low income households started towards the end of the nineteenth century reversed this trend making Britain one of the most egali...

The purpose of this paper is to present an exercise where we identify optimal income tax rules according to various social welfare criteria, keeping fixed the total net tax revenue. To this end, we estimate a microeconomic model with 78 parameters that capture heterogeneity in consumptionleisure preferences for singles and couples as well as in job opportunities across individuals based on deta...

The theoretical literature suggests that taxation can have a large impact on household portfolio selection and allocation. In this paper we analyze the tax treatment of life insurance, considering the cancellation of tax incentives in Italian life insurance contracts for investors with high marginal tax rates and the introduction of incentives for those with low rates. Using repeated cross-sect...

Ghana’s tax reforms constitute the major policy instrument needed to accelerate growth and poverty reduction. Over the past two decades, the government has consistently spent more revenue than it is able to generate and the gap is often financed with foreign aid which has perpetuated the country’s aid dependency. Two options can be explored to reduce the gap between government revenue and expen...

In this paper, we study the impact of tax policy on wage negotiations, workers' effort, and employment when effort is only imperfectly observable. We show that the different wage-setting motives – rent sharing and effort incentives – reinforce the effects of partial tax policy measures but not necessarily those of more fundamental tax reforms. We show that a higher degree of tax progression alw...

Tax competition in the European Union is fierce. Especially since the entry of the new member States, tax reforms in the ”old” Europe are frequent. In this paper we formally test the presence of strategic tax setting in the old EU14 as a reaction to the tax rates in the new member states using a fiscal reaction function. We first develop a simple model of spatial tax competition that predicts a...

In 2015 the British government announced a number of major tax reforms for individual landlords. To give landlords time to adjust, some of these tax measures are being introduced gradually from April 2017, with full effect in tax year 2020/21. The changes in taxation have received much media attention since there has been widespread belief that the new measures were sufficiently skewed against ...