From transfers to tax "co-occupation": the Italian reform of intergovernmental finance

The paper provides some insights into the current reform of the system of intergovernmental relations in Italy. A most relevant change is the abolition of transfers from a higher level of government as an ordinary means of finance for sub-central governments, with the exception of grants having an explicit equalisation purpose. Since the room for autonomous local taxes is quite narrow, transfers are going to be substituted, to a large extent, by different forms of "co-occupation" of central taxes. Using the OECD taxonomy about tax autonomy, it is shown that the effective increase in "infra-marginal" tax autonomy of sub-central governments brought about by the reform will be quite modest. At the margin, however, where autonomy really matters, there could be enough room for the exercise of effective discretion. The main problem is that both the central and the sub-central governments fear the decentralisation of tax power. The former because it feels that, at least in the transitional period, the electorate might not properly distinguish the different fiscal responsibilities; the latter because they would prefer not to tax their electorate, notwithstanding their preferences for more stable and predictable sources of finance with respect to the current system.Intergovernmental finance, decentralisation, tax assignment, tax autonomy

Welfare analysis of fiscal reforms in Europe: Does the representation of family decision processes matter? Evidence from Italy

This paper adopts a "piece-meal" approach to empirically identify, on a sample of Italian households, a collective model where both nonparticipation and non-convex budget sets are allowed for. Two tax reforms, i.e. the 2002 tax changes recently introduced in Italy and a revenue neutral linear income tax are evaluated by the collective framework derived. The predictions obtained for individual labour supplies, income and welfare distribution are then compared with those of a traditional unitary model. The exercise provide an assessment of the distortion introduced in positive and normative analyses when individuals are assumed to behave as if in a unitary, rather than in a collective world. The results suggest that further efforts should be devoted to the analysis of intra-household decision models.collective models; intra household allocation; tax reform

Capital income taxation incentives during economic downturns: Re-thinking theory and evidence

This paper studies the effectiveness of corporate tax incentives in reducing the effective tax rate (ETR) on income from capital to stimulate business investment during economic downturns. We focus on tax rate incentives (TRIs), such as corporate tax rate cuts, and tax base incentives (TBIs), such as increased capital allowances. The standard economic theory states that TRIs reduce the ETR by decreasing tax payments on corporate profits. TBIs instead reduce the ETR as they defer firms tax payments, in turn increasing the present value of dividend distribution. However, this theory does not consider that, in reality, firms face accounting constraints preventing any distribution of cash flows arising from TBIs. For this reason, the standard economic analysis overstates the benefit of any TBI relative to that of TRIs. The paper incorporates accounting constraints on dividend policy into the model for the computation of the ETR and employs the new model to recalculate ETRs in the US and in the UK during 1980-2010. The empirical results confirm that the benefit of TBIs is significantly overstated by the standard theory, and tax rate cuts are more effective in reducing the ETR. We show that this result holds regardless of the form of investment finance (retained earning, new equity and debt), the type capital asset (building and plant and machinery), the level of capital income taxation (corporate and shareholders), and the value of accounting depreciation relative to economic depreciation

Estudio geoquímico de los aceites minerales de la formación petrolífera de la República Argentina y de Bolivia

Hace algunos años (1907), ocupado en un trabajo sobre los petróleos argentinos, tuve oportunidad de examinar dos muestras procedentes del departamento de Orán, provincia de Salta, República Argentina, y una de la provincia del Gran Chaco, Bolivia, en las proximidades de Yacuiba, las que por sus caracteres eran muy semejantes entre sí, pero que se diferenciaban notablemente de las que procedían de las demás zonas petrolíferas argentinas. Esto, unido á la distribución geográfica y relativa proximidad de los puntos en que fueron recogidos dichos petróleos, me condujo á considerarlos como pertenecientes á la misma formación geológica, es decir, la «petrolífera» de Brackebusch, cuya existencia constató este autor en diversas partes del norte de la República Argentina y cuya prolongación en Bolivia sospechó. Los trabajos geológicos realizados más tarde por el doctor Walther Schiller, en Bolivia, y por el doctor Guido Bonarelli, en la República Ar gentina, han confirmado mi suposición basada en esa época en simples analogías. Hoy, por los estudios ópticos efectuados por el especialista-ruso M. A. Rakusin sobre algunos petróleos de la región, además de los dos trabajos geológicos mencionados, como también por nuevas observaciones propias, se está, á mi modo de ver, en posesión de un material suficiente para intentar establecer las relaciones geoquímicas de los aceites minerales de está formación.Facultad de Ciencias Naturales y Muse

Estudio geoquímico de los aceites minerales de la formación petrolífera de la República Argentina y de Bolivia

Hace algunos años (1907), ocupado en un trabajo sobre los petróleos argentinos, tuve oportunidad de examinar dos muestras procedentes del departamento de Orán, provincia de Salta, República Argentina, y una de la provincia del Gran Chaco, Bolivia, en las proximidades de Yacuiba, las que por sus caracteres eran muy semejantes entre sí, pero que se diferenciaban notablemente de las que procedían de las demás zonas petrolíferas argentinas. Esto, unido á la distribución geográfica y relativa proximidad de los puntos en que fueron recogidos dichos petróleos, me condujo á considerarlos como pertenecientes á la misma formación geológica, es decir, la «petrolífera» de Brackebusch, cuya existencia constató este autor en diversas partes del norte de la República Argentina y cuya prolongación en Bolivia sospechó. Los trabajos geológicos realizados más tarde por el doctor Walther Schiller, en Bolivia, y por el doctor Guido Bonarelli, en la República Ar gentina, han confirmado mi suposición basada en esa época en simples analogías. Hoy, por los estudios ópticos efectuados por el especialista-ruso M. A. Rakusin sobre algunos petróleos de la región, además de los dos trabajos geológicos mencionados, como también por nuevas observaciones propias, se está, á mi modo de ver, en posesión de un material suficiente para intentar establecer las relaciones geoquímicas de los aceites minerales de está formación.Facultad de Ciencias Naturales y Muse

Fiscal Reforms during Fiscal Consolidation: The Case of Italy

In this paper we aim to discuss the strengths and weaknesses of the fiscal consolidation package adopted recently by the Italian Government in order to achieve a balanced budget by 2013. Revenues are forecasted to increase by more than 3.3 GDP percentage points; these stem mostly from indirect and property taxation. The analysis of the Italian case is interesting since it seems to be consistent with a recent strand of the literature which, in order to foster both short and long-term economic growth, advocated a shift of the tax burden from capital and labour income to consumption and property. Through a set of micro simulation models, this paper evaluates the effects of the Italian fiscal package on households and firms. We show that, in respect of households’ income, indirect and property tax reforms are highly regressive, whilst the reform makes limited resources available for growth enhancing policies (reduction in the effective corporate tax burden). Then, we propose an alternative fiscal package. We show that a less regressive reform on households can be obtained by shifting taxation from personal and corporate income tax to indirect taxation. Our proposal allows the tax burden on firms to be reduced substantially and, in the meantime, offers lower personal income tax rates on households in the lowest deciles of income distribution since they are penalized most by the increase in indirect taxation.tax reforms, fiscal consolidation, micro simulation models, Italy

Fiscal Reforms during Fiscal Consolidation: The Case of Italy

In this paper we aim to discuss the strengths and weaknesses of the fiscal consolidation package adopted recently by the Italian Government in order to achieve a balanced budget by 2013. Revenues are forecasted to increase by more than 3.3 GDP percentage points; these stem mostly from indirect and property taxation. The analysis of the Italian case is interesting since it seems to be consistent with a recent strand of the literature which, in order to foster both short and long-term economic growth, advocated a shift of the tax burden from capital and labour income to consumption and property. Through a set of micro simulation models, this paper evaluates the effects of the Italian fiscal package on households and firms. We show that, in respect of households’ income, indirect and property tax reforms are highly regressive, whilst the reform makes limited resources available for growth enhancing policies (reduction in the effective corporate tax burden). Then, we propose an alternative fiscal package. We show that a less regressive reform on households can be obtained by shifting taxation from personal and corporate income tax to indirect taxation. Our proposal allows the tax burden on firms to be reduced substantially and, in the meantime, offers lower personal income tax rates on households in the lowest deciles of income distribution since they are penalized most by the increase in indirect taxation.Tax reforms, Fiscal consolidation, Micro simulation models, Italy

Capital income taxation incentives during economic downturns: re-thinking theory and evidence

This paper studies the effectiveness of corporate tax incentives in reducing the effective tax rate (ETR) on income from capital to stimulate business investment during economic downturns. We focus on tax rate incentives (TRIs), such as corporate tax rate cuts, and tax base incentives (TBIs), such as increased capital allowances. The standard economic theory states that TRIs reduce the ETR by decreasing tax payments on corporate profits. TBIs instead reduce the ETR as they defer firms' tax payments, in turn increasing the present value of dividend distribution. However, this theory does not consider that, in reality, firms face accounting constraints preventing any distribution of cash flows arising from TBIs. For this reason, the standard economic analysis overstates the benefit of any TBI relative to that of TRIs. The paper incorporates accounting constraints on dividend policy into the model for the computation of the ETR and employs the new model to recalculate ETRs in the US and in the UK during 1980-2010. The empirical results confirm that the benefit of TBIs is significantly overstated by the standard theory, and tax rate cuts are more effective in reducing the ETR. We show that this result holds regardless of the form of investment finance (retained earning, new equity and debt), the type capital asset (building and plant and machinery), the level of capital income taxation (corporate and shareholders), and the value of accounting depreciation relative to economic depreciation

The working familias tax credit and some European tax reforms in a collective setting.

A framework for simplified implementation of the collective model of labor supply decisions is presented in the context of fiscal reforms in the UK. Through its collective form the model accounts for the well known problem of distribution between wallet and purse, a broadly debated issue which has so far been impossible to model due to the limitations of the unitary model of household behavior. A calibrated data set is used to model the effects of introducing two forms of the Working Families’ Tax Credit. We also summarize results of estimations and calibrations obtained using the same methodology on data from five other European countries. The results underline the importance of taking account of the intrahousehold decision process and suggest that who receives government transfers does matter from the point of view of labor supply and welfare of household members. They also highlight the need for more research into models of household behavior.Collective models; Fiscal reforms; Household labor supply; Intrahousehold allocation;