Publications

Taxation and Economic Growth: Reconciling Intuition and Theory – Dalibor Rohá?

Taxation, Individual Incentives and Economic Growth – Alex Robson

Introduction by Pierre Garello, Director of the Research Department of IREF

We already knew what the general situation and trends are in the EU. Namely, that the EU- 27 is still the region of the world with the highest fiscal burden, that situations differ greatly among EU member states (with new member countries having lower fiscal burden) and that some trends can be found in the evolution of the tax-mix with, for instance, a weak tendency to replace corporate income tax and labour tax with consumption tax. The reports presented here give life to those statistics. They reveal what were the priorities and constraints of the government in each country?

Abstract: This paper surveys possible motivations having a net wealth tax. After giving a short overview over the state of wealth taxation in OECD countries, we discuss both popular arguments for such a tax, as well as economic arguments. It is argued that classical normative principles of taxation known from public economics cannot give a sound justification for a net wealth tax. The efficiency-related effects are also discussed and shown to be theoretically ambiguous, while empirical evidence hints at a negative effect on GDP growth.

Abstract : When serial bank robber Willie Sutton was apprehended at last, someone asked him why he had robbed so many banks: “Because that’s where the money is,” Sutton famously replied. The idea of taxing wealth, whatever its merits, seems to suggest itself as naturally. One may well doubt whether it is wise or prudent to equate any form of taxation so casually with grand larceny; less doubtful is the fact that both designs on the money of some by the ambitions of others are likely to end in disappointment.

Abstract: Wealth taxes are portrayed as being fair, and a rather painless way to increase funding for strapped government programs. So then, why should we consider wealth taxes? To what extent are these taxes a matter of justice and to what extent are these taxes a matter of economics? Are wealth taxes harmful or helpful to an economy? Are wealth taxes fair obligations belonging to the entrepreneur or unjust claims made by society? To answer these questions we will proceed as follows: First, we will analyze the arguments given to justify wealth taxation.

Les individus pauvres font confiance au marché. C’est la principale conclusion qui ressort d’une récente étude de la Banque mondiale bizarrement passée sous silence par les médias français. Analyse de Nicolas Lecaussin

The model presented in the paper leads us to predict that the level of redistribution will be all the more important where the jurisdictions have been able to shelter themselves…

The median-voter hypothesis has been central to an extensive literature on the relationship between income inequality and public income redistribution. Knowing that the real-world market income distributions are skewed to the right, a majority of individuals earns an income that is strictly lower than the mean; the economic theory of democracy predicts a radical redistribution in favour of the poor and middle class. But a large empirical literature looking at explicit redistributive social transfers shows that it is rather the exception than the norm.

By drawing on the median voter model, George Stigler (1970) provided a theoretical basis for the alleged empirical regularity found by Aaron Director that income redistribution runs from the poor and the rich to the middle classes. The median voter model is however only applicable to describe modern representative democracies under relatively strong and unrealistic assumptions, which makes alternative equilibria of income redistribution equally plausible.

A psychological tax contract goes beyond the traditional deterrence model and explains tax morale as a complicated interaction between taxpayers and the government. As a contractual relationship implies duties and rights for each contract party, tax compliance is increased by sticking to the fiscal exchange paradigm between citizens and the state. Citizens are willing to honestly declare income even if they do not receive a full public good equivalent to tax payments as long as the political process is perceived to be fair and legitimate.