Companies & Regulation

France’s Draft 2010 Finance Bill provides for the abolition of the Business Tax, which is perceived by local communities and currently accounts for 10% of their revenues. Called by François Mitterrand “the idiot tax”, the Business Tax is the main local tax, paid every year by nearly 2,9 mln of companies. It is based on the investment in equipment done by local firms (the basis of the tax is the rental value of a company’s tangible fixed assets) plus 1.5% tax on the value added for companies with a turnover exceeding 7.5 mln €.

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.

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…

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.

Abstract: It has been observed that while the respective theoretical merits of fiscal centralisation and decentralisation are debatable, it is even more difficult to empirically assess the degree of centralisation…

Abstract: The idea to compare the fiscal decentralisation and trends in this respect in the European countries is a core for the IREF project. This means that the strict rules of measurement of this complex issue, as fiscal decentralisation is, should be applied to all fiscal systems. Therefore I will follow the description how to generate the index of fiscal decentralisation invented and provided by the prof. Garello and Price . Nevertheless I will also describe and analyze problems which I have met when adopted this scheme into the Polish fiscal system.

Abstract: The Scandinavian countries of Denmark, Norway, and Sweden are similar in many respects, not least with regards to the basic administrative set-up: a non-federal task-related division between state, counties and municipalities. In all three countries, counties and municipalities raise a large share of their own revenue, which is then supplemented by government grants. In addition, central government redistributes large amounts of locally collected revenue between the municipalities and the counties respectively, severely hampering local budgetary autonomy.