Topics (glossaire)

Important determinants of multinational firms’ choice of location include, besides resource cost and infrastructure, the taxation regime through its effects on international pricing and profits. This paper investigates the effects of tax rates on firms’ profits and financing decisions by analyzing a panel of several hundred thousand European firms for the years 1985 to 2010. Results indicate that taxation has a negative effect on overall firm profits but not on returns on shareholder funds.

There has been a sizeable number of studies trying to identify the determinants of judicial performance on the country level. Such a design is appropriate to identify underperforming single judges…

This paper provides both a theoretical framework and an experimental test to analyze how individual responsibility affects social preferences for redistribution in settings where individuals are differentially subjected to the probability of a productivity shock. Our results confirm the predictions of the theoretical section of the paper which presents the redistribution game as a public good game.

The free-market view is in general in favour of decentralization. By and large, the rationale behind this claim is that decentralized taxation and spending imply greater accountability for politicians and public officials. In turn, greater accountability generates less corruption and better services to the community. The authors of this paper suggest that this claim needs to be taken with caution, since the quality of the local institutions significantly affects the outcome of fiscal decentralization (spending performance).

Executive Summary

The main purpose of this paper is to investigate whether, and to which extent, the rules introduced by central governments effectively restrain the spending behaviour of the decentralized authorities. In this paper, the authors provide an innovative comparative analysis by considering two countries that share the same degree of economic development and many cultural traits – France and Italy. Yet, these two countries differ in one crucial respect. France has a tradition of strong centralization, bureaucratic discipline and detailed technocratic control on the periphery (the regions). By contrast, Italy is known to follow a more flexible approach, which allows for some negotiation between the central and the peripheral authorities and feeds expectations for assistance and bail-outs, should the regions engage in excessive spending and violate the budgetary rules set by the centre.

Executive Summary

The current crisis includes two components: high indebtedness and low growth. No easy solution is in sight, since policy-makers are currently facing a double bind, since they need extra cash from the taxpayers and also lighter taxation in order to encourage entrepreneurship, the key ingredient in economic growth.

You can find here a selection of reports and papers on taxation in the EU and in European member States.

The Negative Consequences of Government Expenditure – Jeffrey Miron, Mercatus Center, 2010

Does Government Spending Stimulate Economies? – Veronique de Rugy & Jakina Debnam, Mercatus Center, 2010

Because of the “Tobin Tax”, Professor James Tobin has involuntary become the spearhead of numerous anti-mondialist organizations. A tax synonymous of “compulsory charity” from “rich” (countries) (executing several billions of financial transactions) to “poor” (countries) (victims of the “law of the strongest”). The principle is a systematical taxation of all financial transactions. A simple and ethical principle? It is not that obvious… Numerous scientifical voices clearly explain why this kind of project is not applicable. First of all, such a principle implies an unanimous understanding between countries all over the world; if not, some new “Fiscal Eden” can appears. Next, who can prevent a government to increase the tax rate as high as it wants, even if this destabilizes all exchanges? James Tobin himself explains that some organizations have highjacked his name and his scientifical production to try to defend their ideals.

The tale tells that Arthur B. Laffer sketched his famous curve on a napkin during a lunch with Jude Wanniski, Donald Rumsfeld and Dick Cheney. At that time, he surely did not imagine the renown that will follow this day of December 1974. The Laffer curve relates for each tax rate the expected total tax revenues. For low rates, tax rate and tax revenues move in the same way. But, as rates increase, this relation works in the opposite direction: higher tax rate produces smaller tax revenues. Hence, beyond this “maximum tax rate” the disincentive” effect of taxation is overwhelming. Nonetheless, this maximum rate is not empirically defined: it depends on place, time, circumstances, etc. The following file does not pretend to be exhaustive. Its goal is to introduce key arguments about Laffer Curve.