Integrating Expenditure and Tax Decisions

Integrating Expenditure and Tax Decisions
Author: Joel Slemrod
Publisher:
Total Pages: 25
Release: 2001
Genre: Economics
ISBN:

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This paper seeks to clarify the extent to which the rule for providing public goods ought to correct for the distortionary cost of raising funds. We argue that, in evaluating public projects, the marginal cost of funds (MCF) concept must be supplemented by a symmetrical concept, which we label the marginal benefit of public projects, or MBP, which indicates the value to individuals of the dollars spent. Each of these concepts can be decomposed into two separate components, one reflecting efficiency and the other characterizing the distributional impact of the project itself or its financing. We conclude that efficiency of the financing cannot be ignored, that distributional considerations are also relevant, and that the availability and optimality of tax instruments is critical for evaluating the appropriateness of proceeding with a public good-cum financing project. However, one can construct special cases, as in Kaplow (1996), where the simple cost-benefit criterion applies

The Other Side of the Coin

The Other Side of the Coin
Author: Christopher G. Faricy
Publisher: Russell Sage Foundation
Total Pages: 170
Release: 2021-02-25
Genre: Political Science
ISBN: 0871544407

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Despite high levels of inequality and wage stagnation over several decades, the United States has done relatively little to address these problems—at least in part due to public opinion, which remains highly influential in determining the size and scope of social welfare programs that provide direct benefits to retirees, unemployed workers or poor families. On the other hand, social tax expenditures—or tax subsidies that help citizens pay for expenses such as health insurance or the cost of college and invest in retirement plans—have been widely and successfully implemented, and they now comprise nearly 40 percent of the spending of the American social welfare state. In The Other Side of the Coin, political scientists Christopher Ellis and Christopher Faricy examine public opinion towards social tax expenditures—the other side of the American social welfare state—and their potential to expand support for such social investment. Tax expenditures seek to accomplish many of the goals of direct government expenditures, but they distribute money indirectly, through tax refunds or reductions in taxable income, rather than direct payments on goods and services or benefits. They tend to privilege market-based solutions to social problems such as employer-based tax subsidies for purchasing health insurance versus government-provided health insurance. Drawing on nationally representative surveys and survey experiments, Ellis and Faricy show that social welfare policies designed as tax expenditures, as opposed to direct spending on social welfare programs, are widely popular with the general public. Contrary to previous research suggesting that recipients of these subsidies are often unaware of indirect government aid—sometimes called “the hidden welfare state”—Ellis and Faricy find that citizens are well aware of them and act in their economic self-interest in supporting tax breaks for social welfare purposes. The authors find that many people view the beneficiaries of social tax expenditures to be more deserving of government aid than recipients of direct public social programs, indicating that how government benefits are delivered affects people’s views of recipients’ worthiness. Importantly, tax expenditures are more likely to appeal to citizens with anti-government attitudes, low levels of trust in government, or racial prejudices. As a result, social spending conducted through the tax code is likely to be far more popular than direct government spending on public programs that have the same goals. The first empirical examination of the broad popularity of tax expenditures, The Other Side of the Coin provides compelling insights into constructing a politically feasible—and potentially bipartisan—way to expand the scope of the American welfare state.

Brazil: Tax Expenditure Rationalization Within Broader Tax Reform

Brazil: Tax Expenditure Rationalization Within Broader Tax Reform
Author: Maria Delgado Coelho
Publisher: International Monetary Fund
Total Pages: 46
Release: 2021-09-24
Genre: Business & Economics
ISBN: 1513596624

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The excessive complexity and burden of the Brazilian tax system, riddled by cumulative indirect taxes and heavy payroll contributions, have led to an accumulation of fiscal incentives aimed at reducing its burden on taxpayers and productive activities. Federal and subnational tax expenditures currently stand at over 5 percent of GDP. Rationalizing them can only be comprehensively feasible in the context of a broader sequenced tax reform, and could reduce resource misallocation and income inequality, as well as provide new revenues.

A Study in Public Finance

A Study in Public Finance
Author: A. C. Pigou
Publisher: Read Books Ltd
Total Pages: 357
Release: 2013-03-06
Genre: History
ISBN: 1447487869

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This antiquarian book contains a comprehensive treatise on the topic of public finance, with information on taxation, employment, wages, and much more. This is a text that will be of considerable utility to those with an interest in the history and development of modern economical practices, and will make for a valuable addition to collections of allied literature. The chapters of this book include: 'Principles of Compensation', 'Non-transfer and Transfer Expenditures by Government Authorities', 'The Finance of Business Undertakings Operated by Public Authorities', 'The Range Of Government Expenditure', 'The Place of Loans Other than War Loans in Public Finance', and more. We are republishing this volume now in an affordable, modern edition complete with a specially commissioned biography of Arthur Cecil Pigou.

Tax Expenditure Management

Tax Expenditure Management
Author: Mark Burton
Publisher: Cambridge University Press
Total Pages: 267
Release: 2013-02-14
Genre: Business & Economics
ISBN: 1107007364

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Locates tax expenditure management within the broader discourse of liberal democratic political theory.

The Cambridge Handbook of Psychology and Economic Behaviour

The Cambridge Handbook of Psychology and Economic Behaviour
Author: Alan Lewis
Publisher: Cambridge University Press
Total Pages: 1240
Release: 2018-02-15
Genre: Psychology
ISBN: 1108547680

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There has recently been an escalated interest in the interface between psychology and economics. The Cambridge Handbook of Psychology and Economic Behaviour is a valuable reference dedicated to improving our understanding of the economic mind and economic behaviour. Employing empirical methods - including laboratory and field experiments, observations, questionnaires and interviews - the Handbook provides comprehensive coverage of theory and method, financial and consumer behaviour, the environment and biological perspectives. This second edition also includes new chapters on topics such as neuroeconomics, unemployment, debt, behavioural public finance, and cutting-edge work on fuzzy trace theory and robots, cyborgs and consumption. With distinguished contributors from a variety of countries and theoretical backgrounds, the Handbook is an important step forward in the improvement of communications between the disciplines of psychology and economics that will appeal to academic researchers and graduates in economic psychology and behavioral economics.

Tax Expenditures

Tax Expenditures
Author: Stanley S. Surrey
Publisher:
Total Pages: 328
Release: 1985
Genre: Business & Economics
ISBN:

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In this new book, the authors analyze the development of the concept since 1973, a period in which applications of tax expenditures have expanded rapidly and new dimensions have emerged for even wider usage.

public expenditure and growth

public expenditure and growth
Author: Santiago Herrera
Publisher: World Bank Publications
Total Pages: 68
Release: 2007
Genre: Access to Finance
ISBN:

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Abstract: Given that public spending will have a positive impact on GDP if the benefits exceed the marginal cost of public funds, the present paper deals with measuring costs and benefits of public spending. The paper discusses one cost seldom considered in the literature and in policy debates, namely, the volatility derived from additional public spending. The paper identifies a relationship between public spending volatility and consumption volatility, which implies a direct welfare loss to society. This loss is substantial in developing countries, estimated at 8 percent of consumption. If welfare losses due to volatility are this sizeable, then measuring the benefits of public spending is critical. Gauging benefits based on macro aggregate data requires three caveats: a) considering of the impact of the funding (taxation) required for the additional public spending; b) differentiating between investment and capital formation; c) allowing for heterogeneous response of output to different types of capital and differences in network development. It is essential to go beyond country-specificity to project-level evaluation of the benefits and costs of public projects. From the micro viewpoint, the rate of return of a project must exceed the marginal cost of public funds, determined by tax levels and structure. Credible evaluations require microeconomic evidence and careful specification of counterfactuals. On this, the impact evaluation literature and methods play a critical role. From individual project evaluation, the analyst must contemplate the general equilibrium impacts. In general, the paper advocates for project evaluation as a central piece of any development platform. By increasing the efficiency of public spending, the government can permanently increase the rate of productivity growth and, hence, affect the growth rate of GDP.