Norm Monitoring under Partial Action Observability

In the context of using norms for controlling multi-agent systems, a vitally important question that has not yet been addressed in the literature is the development of mechanisms for monitoring norm compliance under partial action observability. This paper proposes the reconstruction of unobserved actions to tackle this problem. In particular, we formalise the problem of reconstructing unobserved actions, and propose an information model and algorithms for monitoring norms under partial action observability using two different processes for reconstructing unobserved actions. Our evaluation shows that reconstructing unobserved actions increases significantly the number of norm violations and fulfilments detected.Comment: Accepted at the IEEE Transaction on Cybernetic

Essays in the Economics and Law of Taxation

Firms are critical components in the success of virtually all modern tax systems. This dissertation uses theoretical and empirical methods to investigate firm behavioral responses to changes in tax law that affect firms’ substantive tax burden, their role as the government’s intermediary, or both. Such responses can change key tax system parameters, including the tax burden and government revenues through a change in compliance with the law or, in some cases, a change in the economic fundamentals like consumption or labor demand. In Chapters 1 and 3, I explore this premise in the context of consumption taxes. Chapter 2 considers the income tax context. Two themes emerge from these projects. First, the nature of firms as entities in the tax system is changing, and these changes may affect the traditional role of firms as the locus of information for economic activity. Chapters 1 and 3 consider the phenomenon of “platform” firms, which shift income generation or consumption from traditional employers or retailers to individuals. Additionally, information on these taxable transactions is concentrated in the firm facilitating the transaction. Chapters 1 and 3 explore how this combination affords the platform firm significant leverage in negotiating the terms of its cooperation with local tax authorities in remitting taxes. In Chapter 2, I document the expansion of labor income generated outside of the traditional employer relationship, which also has a potentially disruptive effect as the government does not have the resources to intensively audit individual business deductions. Second, collectively, these papers highlight the relevance of statutory features—reporting requirements, remittance and withholding obligations, size-based exemptions—which, historically, have not featured prominently in the optimal taxation or incidence literatures in public finance. In both Chapters 1 and 3, I find that shifting the remittance duty affects the absolute tax burden of consumers. In Chapter 2, I find evidence that a firm size-based exemption distorts the decisions of firms to locate, or at least to report their location, close to the threshold number of employees. These findings join those in an increasingly populated field of papers that recognize the importance of legal and regulatory dimensions for the design of modern tax systems.PHDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttps://deepblue.lib.umich.edu/bitstream/2027.42/145972/1/ewilking_1.pd

Knowledge Representation Concepts for Automated SLA Management

Outsourcing of complex IT infrastructure to IT service providers has increased substantially during the past years. IT service providers must be able to fulfil their service-quality commitments based upon predefined Service Level Agreements (SLAs) with the service customer. They need to manage, execute and maintain thousands of SLAs for different customers and different types of services, which needs new levels of flexibility and automation not available with the current technology. The complexity of contractual logic in SLAs requires new forms of knowledge representation to automatically draw inferences and execute contractual agreements. A logic-based approach provides several advantages including automated rule chaining allowing for compact knowledge representation as well as flexibility to adapt to rapidly changing business requirements. We suggest adequate logical formalisms for representation and enforcement of SLA rules and describe a proof-of-concept implementation. The article describes selected formalisms of the ContractLog KR and their adequacy for automated SLA management and presents results of experiments to demonstrate flexibility and scalability of the approach.Comment: Paschke, A. and Bichler, M.: Knowledge Representation Concepts for Automated SLA Management, Int. Journal of Decision Support Systems (DSS), submitted 19th March 200

Essays on Fiscal Policy and Tax Compliance

This dissertation comprises three essays that examine critical aspects of fiscal policy and explores important determinants of tax compliance in a developing country context. The first essay examines the fiscal response to changes in debt-to-GDP for a panel of developing countries. Our empirical strategy adopts a dynamic difference generalized methods of moments (DGMM) model with forward orthogonal deviation. We find a positive and significant response for the primary balance and ‘fiscal effort’ to changes in debt-to-GDP. For the fiscal components, we find a positive relationship between debt-to-GDP and general and tax revenues, and a negative relationship with primary spending. We also find evidence of nonlinearities, with countries making larger increases in the primary balance and fiscal effort at higher levels of debt, largely driven by increases in revenues. Higher income countries demonstrate a greater propensity to adjust along the revenue margins, compared to lower income countries. This might be indicative of systemic revenue mobilization challenges facing the latter. The second essay examines the effect of the provision of taxpayer services on filing and payment of the corporate income tax (CIT) and general consumption tax (GCT) for large taxpayers in Jamaica. We use a regression discontinuity design (RDD) that exploits an exogenous jump in the intensity of taxpayer service delivery, which occurs when a taxpayer reaches gross receipts of J$500 million (US$5.7 million) and is selected into the large taxpayer office (LTO). The results indicate null effects for the CIT but positive filing and payment compliance effects for the GCT. The contrasting results for the CIT and GCT may be due to the relatively weaker legal enforcement framework of the former. The results provide suggestive evidence of a complementarity between the strength of the legal enforcement framework of the taxing regime and the provision of taxpayer services. In the third essay we implement public goods messaging experiments to examine the effects on personal income tax (PIT) compliance among self-employed individuals in Jamaica. In the first sub-experiment we examine the effect of the standard public goods message on payment of quarterly PIT obligations. In the second sub-experiment we focus on payment of PIT arrears and expand the message context to include a variant of the standard public goods message – which provides additional information on actual spending on key public goods and services. The compliance outcomes in sub-experiment two relate to established PIT delinquencies, compared to sub-experiment one where there is no legal obligation to comply. We find that the standard public goods message had no effect on compliance with quarterly PIT payments in sub-experiment one. However results from sub-experiment two indicate positive compliance effects from the standard and augmented public goods messages on the probability of making a payment and the amount of PIT arrears paid after nineteen weeks. Point estimates from the standard and augmented public goods messages are not statistically different for any of the outcomes examined; suggesting that additional information on public spending allocations does not matter

Essays in Tax Policy Evaluation

This dissertation contains a collection of new theories, empirical methodologies, and data analyses for the evaluation of tax policy. In the first chapter, I investigate the degree to which tax deductions respond to the tax rate, and the implications this has for tax policy. I define a new tax instrument, the 'deductibility rate', which specifies the proportion of eligible expenses a taxpayer may deduct when preparing her taxes. If the utilities of gross income and deductions are separable, then the deduction elasticity reflects the revenue leakage caused by greater deductibility. To identify this elasticity, I develop the first method to decompose bunching in taxable income into its constituent parts, exploiting the removal of a notch in the tax schedule. This setting also generates an observed counterfactual density, obviating the parametric assumptions routinely made in bunching studies. Applying this method to new administrative tax data from Australia, I find that while deductions account for just 5% of taxable income, they account for 35% of the response of taxable income to the tax rate. Based on an elasticity of taxable income of 0.06, the deduction elasticity is -0.45, and the gross-income elasticity is 0.04. Consistent with standard optimal-tax logic, the sensitivity of deductions to the tax rate suggests that restricting deductions could raise welfare. In the second chapter, I develop a new empirical method for addressing a common problem afflicting regression discontinuity (RD) designs. This design has gained wide popularity for its perceived credibility in identifying treatment effects. But there are common settings in which the necessary assumptions of the method are not satisfied. When units manipulate their value of the running variable across the treatment threshold, this can distort the average outcome near the threshold, invalidating the RD design. Some settings in which the design would otherwise be appropriate offer a comparison group for which the treatment status does not change at the threshold. In such settings, it's common to observe variables, such as lags of the outcome, that predict the outcome in the absence of manipulation. I devise a nonparametric propensity-score reweighting method that exploits these variables to correct for manipulation bias. The method relies on 'manipulation-on-observed-variables' and common-support assumptions akin to those used in standard matching and weighting exercises. In the third chapter, I develop a new theory of tax evasion under third-party reporting. When a tax authority requires reports from third parties about a taxable transaction, tax evasion is feasible only if the reporters underreport collusively. I develop a model of third-party reporting to investigate its limits as an enforcement tool. Under what conditions is a third-party reporting regime robust to collusion between reporters? The deterrence effect of third-party reporting increases with the number of reporters per transaction and with uncertainty about the other reports. Under certain conditions, third-party reporting can ensure full compliance when a common report is required across transactions. Compliance also improves with the number of related transactions in which there is underreporting, such that there is a maximum number of related transactions beyond which evasion is infeasible. These findings offer insights into the settings in which third-party reporting obligations are most effective in increasing compliance.PHDPublic Policy & EconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttps://deepblue.lib.umich.edu/bitstream/2027.42/145818/1/steveham_1.pd

How Effective are Unemployment Benefit Sanctions? Looking Beyond Unemployment Exit

This paper provides a comprehensive evaluation of benefit sanctions, i.e. temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements. In addition to the effects on unemployment durations, we evaluate the effects on post-unemployment employment stability, on exits from the labor market and on earnings. In our analysis we use a rich set of Swiss register data which allow us to distinguish between ex ante effects, the effects of warnings and the effects of enforcement of benefit sanctions. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force. Warnings do not affect subsequent employment stability but do reduce post-unemployment earnings. Actual benefit reductions lower the quality of post-unemployment jobs both in terms of job duration as well as in terms of earnings. The net effect of a benefit sanction on post-unemployment income is negative. Over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect. In addition to that, stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect.Benefit sanctions;earnings effects;unemployment duration;competing-risk duration models

How effective are unemployment benefit sanctions? Looking beyond unemployment exit

This paper provides a comprehensive evaluation of benefit sanctions ,i.e. temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements. In addition to the effects on unemployment durations, we evaluate the effects on post-unemployment employment stability, on exits from the labor market and on earnings. In our analysis we use a rich set of Swiss register data which allow us to distinguish between ex ante effects, the effects of warnings and the effects of enforcement of benefit sanctions. Adopting a multivariate mixed proportional hazard approach to address selectivity, we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force. Warnings do not affect subsequent employment stability but do reduce post-unemployment earnings. Actual benefit reductions lower the quality of post-unemployment jobs both in terms of job duration as well as in terms of earnings. The net effect of a benefit sanction on post-unemployment income is negative. Over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect. In addition to that, stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect.Benefit sanctions; earnings effects; unemployment duration; competing-risk duration models