Could the World be Flat? Simulating Flat Tax Reforms in Western Europe

The flat tax idea has given rise to an ongoing debate both in academics and politics. Further on, it has recently been very successful, especially in transition countries in Eastern Europe. Although flat taxes are high on the political agenda in various Western European countries, they have not been implemented in these grown-up welfare states. The introduction of a flat tax with a basic tax allowance, a low uniform marginal tax rate, and a broad tax base as a reform of existing tax systems is supposed to have several advantages. Most importantly, positive effects on employment and GDP as well as reduced tax distortions are expected. In addition, flat tax reforms are thought to reduce administration and compliance costs as well as incentives for tax avoidance or evasion. However, the distributional effects seem to prevent a flat tax adoption in democracies with a well-established middle class. The motivation of this book is to identify hereby the driving forces behind the economic effects of a flat tax reform. There are two dimensions to be considered that are mutually interdependent: the details of the reform and the environment of its implementation. First, the flat tax design (e.g. parameters such as marginal rate and allowance, tax base simplification or cash flow corporate taxation) plays an important role for the results. Second, the results crucially depend on the country under observation. The underlying income distribution and demographic structure as well as the institutional background (i.e. the tax benefit system, welfare state) are decisive for the outcome of such a reform. The present book contributes to the existing literature in various ways. First, we provide a comprehensive survey of the state-of-the-art in simulation modelling for the ex-ante analysis of tax reform proposals. Second, we analyse and compare different types of welfare states and tax benefit systems especially with respect to the distribution and redistribution of income to explain differing results across countries. Third, we conduct an extensive analysis of the key sources of the economic outcomes of flat tax reforms. For this purpose, the extended methodology of simulation analysis is applied to analyse different hypothetical flat tax scenarios and the impact of their key elements (tax base simplification, marginal tax rate and basic allowance) on equity and efficiency for Germany and the other EU-15 countries in a common microeconometric framework. The analysis differs from the existing literature mainly by analysing the distributional effects as well as the effects on welfare and employment in a uniform simulation model and by applying a systematic approach for choosing the flat tax parameters. As stated above, the aim of this book is to identify the conditions which mainly influence the economic effects of a flat tax reform. The setup of this analysis is as follows. Chapter 2 introduces the methodology. Chapter 3 analyses the relevance of the flat tax design. In chapter 4, the European countries are compared regarding their institutional background and the underlying income distribution. In chapter 5, the role of these country specific aspects and their impact for possible flat tax reforms is investigated. Chapter 6 draws conclusions. At last, what can be learnt from our analysis is that the flatness of the tax schedule itself is not a key feature of the economic success of a tax reform. Other elements (simplification, increased compliance, corporate taxation) play a more important role. However, a flat tax reform can indeed overcome the fundamental equity efficiency trade-off. This is only true in two specific cases: first, for Mediterranean countries with highly polarised income distributions, and second, for Germany in the long-run if accounting for general equilibrium effects. Therefore, due to its adverse short-term distributional effects, the chances that the flat tax idea will invade the grown-up democracies of Western Europe are rather low. However, a further movement towards lower (marginal) tax rates with broader and simpler tax bases shall be observed. This, however, could eventually lead to tax benefit systems moving closer to linearity, albeit without an actual flat tax schedule

The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union

In this thesis I give an account of own empirical work on the impact of international trade with Newly Industrialised Countries on the wages and employment of low-skilled and high-skilled workers in the European Union, based on data for a panel of EU countries

Factors affecting cocoa productivity among the smallholders in West Malaysia

The principal objectives of this study are to identify the production factors that influence cocoa productivity at the smallholder's level and to examine resource allocation and technical efficiency in cocoa production. Cross-sectional data collected from 260 cocoa smallholders were used for the study. Both the average production function estimated by the Ordinary Least Squares techniques and the frontier production function estimated by the Linear Programming methodology were employed in the analysis. The results indicated that the input factors which had a significant impact on the production of cocoa were land size, labour, living capital, farm implements and fertilisers. Among the management proxies, only farmer's age, extension contact, farmer's education and the practice of keeping farm records and accounts were important. The data presented in this study 1end support to the hypothesis that the cocoa smallholders were highly inefficient allocatively. Inputs comprising land, fertilisers, and farm implements were underused while labour and living capital were overused. Technical inefficiencies were also present in the study area. The study revealed that a large proportion of the farmers have output levels below their potential. Output could be increased between 18 to 52 per cent if all the least efficient farmers attained those levels of technical efficiency that were achieved by the best farmers in the sample. The variations in technical efficiency in this area were explained by differences in land size, farmer's educational level, their age and the practice of keeping farm records and accounts. This study emphasises the need that increasing efforts must be directed at the least efficient farmers through better and effective management practices and better organization of farm activity without major new investments, at least in the short-run

An empirical examination of bilateral seaborne trade flows in the world economy

The aim of this thesis is to construct a disaggregated econometric model of the pattern of bilateral seaborne trade flows. Commodities are classified into 5 categories according to the type of ship used in their transportation. Exports and imports are classified into 30 regions, according to the major sea-lanes used by ships. An understanding of the determinants of trade f lows at this level of disaggregation is important for shipowners. The use of disaggregated data also helps in the estimation of the price elasticities of traded goods, an issue of more general interest to exporters and policy makers. Our theoretical model borrows the ideas of multistage budgeting from consumer demand theory. The total imports of each importing region are allocated amongst their trade partners, depending on relative prices and trends in tastes. Our econometric implementation of the model uses the very general Constant Ratio of Elasticities of Substitution Homogeneous (CRESH) functional form. This encompasses the CES, LES, Cobb-Douglas and Leontief forms, more commonly used in trade models. Empirical implementation of the model has resulted in elasticity estimates which are much higher than those estimated in earlier trade models. This indicates a high degree of competition in international markets. The pattern of these elasticities suggest that importing regions establish a few trade partners internationally for the main bulk of their imports, while the proportion of their imports allocated to the remaining trade partners, is highly sensitive to relative prices

Student, text, world : literacy and the expansion of pedagogical space

Using Foucault’s notion of a dispositif or social apparatus, this thesis charts the pedagogical relations established in contemporary literacy discourse in terms of a space of visibility and a form of sayability, and analyses them as operating within power-knowledge. It furthers this analysis by conceptualising the space of literacy as a normative heterotopia and as a recent mutation of bio-power, the government of the developing body. Such analysis problematises the discourse of literacy, from the term’s systematic indefiniteness to its real effectivity in producing subjects, spaces and disciplinary techniques. Literacy combines and interrelates a nineteenth-century establishment and a twentieth-century rearrangement of pedagogical space. The national language, the developing child, as well as the world of demands and national progress: all emerge as part of the nineteenth-century educational state, forming a set of disciplinary procedures, a structure of perception and a desire to recognise and utilise language development. Literacy discourse appropriates these knowledges and multiplies the sites in which they operate. It articulates the recognition and enablement of non-standard literacies with the governmental project of intensifying and directing the powers of a population. The pedagogical relations operationalised in literacy discourse project a continuous disciplinary power over a general social space. Thus, literacy has become both a common and much theorised social concern, and a term which structures lives, spaces, discourse and power.Beginning with a close analysis of a recent education policy document, this thesis looks at the deployment of literacy as a way of organising experience through discourse and as a means of modulating the relations between three historically constituted terms: the student, the text, and the world. Schooling and literacy thus insert themselves into a machinery of social production and into the production of everyday concerns and processes. Consequently, literacy enters into our most material and non-linguistic moments through a teleological arrangement of time and space, a pedagogisation which is at the same time a textualisation of existence