Three Essays at the Intersection of Theory and Public Finance

identification;general equilibrium;tax salience;tax remittance;returns to scale;public finance;Economics;Social Sciences (General);Business and Economics;Social Sciences;Economics

Glass, BenjaminFox, Jeremy T. ;

University of Michigan

关键词: identification;    general equilibrium;    tax salience;    tax remittance;    returns to scale;    public finance;    Economics;    Social Sciences (General);    Business and Economics;    Social Sciences;    Economics;   

Others  :  https://deepblue.lib.umich.edu/bitstream/handle/2027.42/145890/benglass_1.pdf?sequence=1&isAllowed=y

瑞士|英语

来源: The Illinois Digital Environment for Access to Learning and Scholarship

【 摘 要 】

This dissertation addresses three distinct tax questions.First, we address the identification of deadweight loss from non-salient taxes.Second, we generalize the canonical result that the impact of a tax does not depend on who has the legal responsibility to remit the tax payment.Finally, I extend the Walrasian equilibrium model to include unbounded increasing returns to scale production technology.Taxes create deadweight loss by distorting consumer choice, so to the extent that consumers perceive taxes to be lower than they really are, deadweight loss declines.Deadweight loss is a convex function of perceived taxes, so its aggregate magnitude depends not only on the average tax misperception, but also on its heterogeneity among consumers.Aggregate data cannot reveal this heterogeneity, yet one can infer lower and upper bounds on deadweight loss relying solely on properties of aggregate demand.Sufficiently rich individual-level data permit identification of deadweight loss even with heterogeneous tax misperceptions.Under strong assumptions on the joint distribution of tax salience and preferences, survey data illustrate that tax salience heterogeneity can yield deadweight loss twice as large as one would calculate under the assumption of a homogeneous perceived price.Relaxing these assumptions, even slightly, yields much more destructive results: the unconstrained upper bound of deadweight loss is more than fifty times larger than the lower bound one would compute assuming homogeneous perceptions of price.Conventional wisdom holds that the impact of a sales tax does not depend on whether the buyer or the seller remits the tax to the government. We extend this result to a general setting.Equilibrium non-transfer activity depends only on the total tax liability, regardless of who bears the statutory remittance liability.In a competitive setting, this result applies when all agents must pay each other for sales and purchases.However, changing the remittance obligation may transfer wealth lump-sum, depending on legal production and consumption rights.Thus, the remittance neutrality of taxes is a variation on Coase’s Theorem.A Walrasian equilibrium with production cannot exist when firms have unboundedly increasing returns to scale technology.If any price-taking firm chooses to produce at all, then it could achieve infinite profit by producing an infinite amount.Thus, the difficulty of increasing returns to scale in perfect competition results from firms acting without accounting for input supply constraints.