Bonus Taxes and International Competition for Bank Managers

We analyze the competition in bonus taxation when banks compensate their managers by means of fixed and incentive pay and bankers are internationally mobile. Banks choose bonus payments that induce excessive managerial risk-taking to maximize their private benefits of existing government bailout guarantees. In this setting the international competition in bonus taxes may feature a 'race to the bottom' or a 'race to the top', depending on whether bankers are a source of net positive tax revenue or inflict net fiscal losses on taxpayers as a result of incentive pay. A 'race to the top' becomes more likely when governments' impose only lax capital requirements on banks, whereas a 'race to the bottom' is more likely when bank losses are partly collectivized in a banking union

Essays in Nonlinear Labor Income Taxation with Tax-Driven Migrations

This dissertation includes two essays in nonlinear labor income taxation with tax-driven migrations. In the first essay, we study optimal nonlinear income taxation in an open economy with migration possibilities and social comparisons. Recent evidence suggests that globalization has not just reduced the barriers to international labor mobility but also induced more cross-country comparisons. In an open economy with tax-driven migrations and consumption externalities motivated by altruism or jealousy, we derive an optimal tax formula that subsumes existing ones obtained under maximin social objective and additively separable utility, and identify the sign of second-best marginal tax rates for all skill levels. We establish thresholds of the elasticity and level of migration to determine when relativity and inequality are complementary (or substitutive) in shaping the optimal top tax rates. These thresholds are in general different between altruism-type and jealousy-type relativity. Surprisingly, there exist reasonable combinations of relativity, mobility and inequality such that tax competition results in higher equilibrium top tax rates than proposed in autarky. Also, under both Nash and Stackelberg tax competition, we have the following numerical finding by plugging realistic parameter values in our tax formula. If the migration probability of top-income workers is around 50%, then the country facing labor inflow (respectively, outflow) of these types of workers implements around 10% lower (respectively, higher) top tax rates than suggested by the autarky equilibrium which does not allow for migration possibilities. In the second essay, we study majority voting over selfishly optimal nonlinear income tax schedules proposed by a continuum of workers who can migrate between two competing jurisdictions at the expense of some migration cost. Both skill and migration cost are the private information of each worker. Assuming quasilinear-in-consumption preferences, the tax schedule proposed by the median skill type is the Condorcet winner that redistributes incomes from the rich and poor toward the middle. While it features negative marginal tax rates for low skills, it features positive marginal tax rates for high skills who have elasticities of migration smaller than a threshold. In a comparison with the autarky economy, we establish the skill-dependent threshold of migration elasticity for all types of workers. If their migration elasticities are higher than their respective threshold, then migrations induce lower marginal tax rates than does autarky; otherwise migrations induce higher marginal tax rates for the jurisdiction facing net labor inflow in low skills while net labor outflow in high skills. Counterfactual simulations using empirical parameter estimates show that eliminating migrations in the U.S. would generate top tax rates over 20% higher than the 42.5% that was actually implemented

Essays on public finance and publicly provided public good

Le résumé en français n'a pas été communiqué par l'auteur.This thesis deals with several theoretical subjects about optimal fiscal and government policy. It contains my four works about tax and other redistributive policy, starting with the general introductory survey as the first chapter. Chapter 2 compares ad-valorem and specific taxation in models where a representative consumer with an exogenous income has both a quality and a quantity choice under perfect competition. In the setting, while ad-valorem tax causes income effect only, specific tax causes both income effect and substitution effect. Therefore, advalorem tax decreases consumer demand for both quality and quantity; on the other hand, specific tax decreases consumer demand for quantity. However, the sign of consumer demand for quality is ambiguous and is determined by the curvature of marginal utility on quantity. Additionally, using a constant elasticity of substitution (CES) utility function and a linear price function, we show that ad-valorem tax is superior to specific tax except for the Leontief preference under which the two forms of commodity taxes generate the same tax revenue. The substitution effect caused by specific tax disappears if the elasticity of substitution converges to zero. In Chapter 3, We examine optimal taxation and public good provision by a government which takes reduction of envy into consideration as one of the constraints. We adopt the notion of extended envy-freeness proposed by Diamantaras and Thomson(1990), called λ-equitability. We derive the modified Samuelson rule at an optimum income tax, and show that, using a constant elasticity of substitution utility function, the direction of distorting the original Samuelson rule to relax λ envy free constraints is crucially determined by the elasticity of substitution. Furthermore, we numerically show that the level of public good increases (or decreases) in the degree of envy-freeness when the provision level is upwardly (or downwardly) distorted. Also,Chapter 4 covers the topic of public good provision under income transfer under that ethical constraint, but allows the social planner to set the surcharge fee for the purpose of excluding some agents whereas we simplify their income as exogenous one (or initial wealth). In this chapter, we study optimal public good provision and user fee in order to exclude some agents by Rawlsian or utilitarian government under lump-sum transfer, constrained by reduction of envy. In particular, we employ the exclusion technique used in Hellwig (2005), i.e., the policymaker decides the level of provision and surcharge fee paid by those making access to it, as well as uniform transfer. Different from Hellwig (2005), we introduce heterogeneity in initial wealth for agents and the envy-free constraint with respect to their one, but not to their tastes for public good. In this setting, we derive the optimal provision level and user fee, and compared to those in Hellwig (2005), for Rawlsian government, the up-charge is lower than the one derived in Hellwig (2005) in order to reduce the envy. Chapter 5 studies optimal nonlinear income tax schedule at symmetric equilibria at which two symmetric states (or tax authorities) compete in order to attract more tax-payers from the opposite. It is different from the existing papers that taxpayers’ wage are endogenously determined by production technology. The optimal tax schedule embraces not only migration effect, but also trickle-down effect coming from endogenous wage, and the migration effect stimulates the trickle-down effect. Compared to previous works, the threat of emigration never disappears in marginal tax rate for highskilled workers because emigration terms are embedded in the production and such factors have impacts on the productivities or their unit wages

Essays in Nonlinear Labor Income Taxation with Tax-Driven Migrations

This dissertation includes two essays in nonlinear labor income taxation with tax-driven migrations. In the first essay, we study optimal nonlinear income taxation in an open economy with migration possibilities and social comparisons. Recent evidence suggests that globalization has not just reduced the barriers to international labor mobility but also induced more cross-country comparisons. In an open economy with tax-driven migrations and consumption externalities motivated by altruism or jealousy, we derive an optimal tax formula that subsumes existing ones obtained under maximin social objective and additively separable utility, and identify the sign of second-best marginal tax rates for all skill levels. We establish thresholds of the elasticity and level of migration to determine when relativity and inequality are complementary (or substitutive) in shaping the optimal top tax rates. These thresholds are in general different between altruism-type and jealousy-type relativity. Surprisingly, there exist reasonable combinations of relativity, mobility and inequality such that tax competition results in higher equilibrium top tax rates than proposed in autarky. Also, under both Nash and Stackelberg tax competition, we have the following numerical finding by plugging realistic parameter values in our tax formula. If the migration probability of top-income workers is around 50%, then the country facing labor inflow (respectively, outflow) of these types of workers implements around 10% lower (respectively, higher) top tax rates than suggested by the autarky equilibrium which does not allow for migration possibilities. In the second essay, we study majority voting over selfishly optimal nonlinear income tax schedules proposed by a continuum of workers who can migrate between two competing jurisdictions at the expense of some migration cost. Both skill and migration cost are the private information of each worker. Assuming quasilinear-in-consumption preferences, the tax schedule proposed by the median skill type is the Condorcet winner that redistributes incomes from the rich and poor toward the middle. While it features negative marginal tax rates for low skills, it features positive marginal tax rates for high skills who have elasticities of migration smaller than a threshold. In a comparison with the autarky economy, we establish the skill-dependent threshold of migration elasticity for all types of workers. If their migration elasticities are higher than their respective threshold, then migrations induce lower marginal tax rates than does autarky; otherwise migrations induce higher marginal tax rates for the jurisdiction facing net labor inflow in low skills while net labor outflow in high skills. Counterfactual simulations using empirical parameter estimates show that eliminating migrations in the U.S. would generate top tax rates over 20% higher than the 42.5% that was actually implemented

La nueva supervisión bancaria europea

El principal objetivo del estudio es la realización de un análisis de la situación en la que se encuentra una de las más intensas herramientas de control a disposición de los poderes públicos. Me refiero a la potestad de supervisión, que históricamente se viene ejerciendo sobre las entidades de crédito, y cuyo régimen ha experimentado recientemente relevantes alteraciones.Durante los últimos tiempos la configuración del negocio bancario se ha visto sometida a múltiples cambios, con especial mención a la internacionalización de las actividades y a la difuminación de los límites con otros ámbitos propios del sector financiero, como son los de los valores o los seguros. Puestas de manifiesto tales transformaciones, se han planteado y adoptado diversas medidas para acomodar las estructuras de fiscalización y control a la nueva naturaleza de las actividades, resultando paradigmática la implantación de la Unión Bancaria, que afecta tanto al contexto español como al de la Unión Europea.La aludida Unión Bancaria, todavía incompleta, se integra por diversas estructuras comúnmente conocidas como pilares, entre las que destaca el Mecanismo Único de Supervisión, al que se encomiendan relevantes funciones de vigilancia de las entidades de crédito de los Estados miembros. Como principal característica derivada de la implantación de este Mecanismo Único de Supervisión aparece la asunción, por parte del Banco Central Europeo, de un gran número de competencias que hasta entonces correspondían a las autoridades nacionales.Esta novedosa asignación de funciones a la institución de la Unión, que ha exigido profundas alteraciones orgánicas en su seno, plantea diversos interrogantes, que se analizan a lo largo del trabajo, y que alcanzan, entre otros, a la base jurídica escogida, al ámbito de aplicación subjetivo, al limitado alcance territorial del modelo, a la posible confusión de objetivos entre los diferentes cometidos, a la aplicación de un ordenamiento plural o a la generación de duplicidades y problemas de coordinación.Gran parte de estas limitaciones aparecen como consecuencia directa de heterogéneos factores, tanto jurídicos como políticos, que, sumados a la coyuntura crítica y a la urgencia para la introducción de reformas, llevaron a una apresurada configuración del mecanismo a partir de los mimbres disponibles.Por otro lado, esta europeización de las potestades de vigilancia sobre las entidades de crédito ha supuesto también un replanteamiento del alcance y contenido de las muy variadas prerrogativas supervisoras que se encuentran a disposición de las autoridades. Poderes, estos, que en multitud de ocasiones pasarán a contar con un régimen dual, según quién sea el supervisor actuante, en sus vertientes material, procedimental o de garantías.De la delimitación del alcance de las funciones atribuidas a las diversas autoridades, que se vienen a ejercer de forma diferenciada sobre las distintas clases de entidades y procedimientos, podría concluirse que el desplazamiento de los supervisores nacionales por parte del Banco Central Europeo es relevante, pero no total y absoluto.Respecto de las alteraciones en los caracteres y límites de las potestades de supervisión, resulta de singular interés incidir sobre un concreto ámbito de actuaciones, como es el relativo al diseño y control del gobierno corporativo de las entidades bancarias. Y ello porque en esta parcela, además de las alteraciones competenciales y procedimentales derivadas de la articulación del Mecanismo Único de Supervisión, se ha experimentado recientemente un notable incremento en la intensidad del marco de intervención administrativa, lo se identifica con un proceso de publificación de esferas previamente disciplinadas por el derecho privado.En cualquier caso, el Mecanismo Único de Supervisión presenta diversas virtudes, relacionadas con la consolidación del mercado interior de los servicios financieros y con la evitación de políticas nacionales oportunistas, pero también adolece de ciertos defectos, vinculados a la complejidad del marco institucional y procedimental o a la dualidad en su ámbito de aplicación. Las anteriores ventajas y deficiencias, ante el grado de provisionalidad actual del modelo, se constatarán fundamentalmente en el medio y largo plazos, dependiendo en gran medida del efectivo desempeño y rigor mostrados por el Banco Central Europeo.Sea como fuere, sí podrían introducirse algunas mejoras en las estructuras de la Unión Bancaria, que permitieran alcanzar una plena operatividad de sus mecanismos, a través de la habilitación del Sistema Europeo de Garantía de Depósitos, la creación de una red de seguridad para el Fondo Único de Resolución, o la ampliación del alcance subjetivo y territorial de la supervisión y resolución europeas. Para llevar a cabo las oportunas reformas, ante las posiciones políticas enfrentadas y en atención a las reticencias de algunos Estados miembros a la cesión de poder, deberá apelarse a la acreditada habilidad adaptativa de la Unión Europea, capaz de alcanzar muy ambiciosos objetivos mediante un enfoque pragmático basado en las transformaciones graduales y continuas.<br /