Tax Structure in Developing Countries: Many Puzzles and a Possible Explanation

Tax policies seen in developing countries are puzzling on many dimensions. To begin with, revenue/GDP is surprisingly small compared with that in developed economies. Taxes on labor income play a minor role. Taxes on consumption are important, but effective tax rates vary dramatically by firm, with many firms avoiding taxes entirely by operating through cash in the informal economy and others facing very high liabilities. Taxes on capital are an important source of revenue, as are tariffs and seignorage, all contrary to the theoretical literature. In this paper, we argue that all of these aspects of policy may be sensible responses if a government is able in practice to collect taxes only from those firms that make use of the financial sector. Through use of the financial sector, firms generate a paper trail, facilitating tax enforcement. The threat of disintermediation then limits how much can be collected in taxes. Taxes can most easily be collected from the firms most dependent on the financial sector, presumably capital-intensive firms. Given the resulting differential tax rates by sector, other policies would sensibly be used to offset these tax distortions. Tariff protection for capital-intensive firms is one. Inflation, imposing a tax on the cash economy is another.

Wind-Interaction Models for the Early Afterglows of Gamma-Ray Bursts: The Case of GRB 021004

Wind-interaction models for gamma-ray burst afterglows predict that the optical emission from the reverse shock drops below that from the forward shock within 100s of seconds of the burst. The typical frequency $\nu_m$ of the synchrotron emission from the forward shock passes through the optical band typically on a timescale of minutes to hours. Before the passage of $\nu_m$, the optical flux evolves as $t^{-1/4}$ and after the passage, the decay steepens to $t^{-(3p-2)/4}$, where $p$ is the exponent for the assumed power-law energy distribution of nonthermal electrons and is typically $\sim 2$. The steepening in the slope of temporal decay should be readily identifiable in the early afterglow light curves. We propose that such a steepening was observed in the R-band light curve of GRB 021004 around day 0.1. Available data at several radio frequencies are consistent with this interpretation, as are the X-ray observations around day~1. The early evolution of GRB 021004 contrasts with that of GRB 990123, which can be described by emission from interaction with a constant density medium.Comment: 16 pages, 1 figure, submitted to ApJ

Puzzling Tax Structures in Developing Countries: A Comparison of Two Alternative Explanations

Observed economic policies in developing countries differ sharply both from those observed among developed countries and from those forecast by existing models of optimal policies. For example, developing countries rely little on broad-based taxes, and make substantial use of tariffs and seignorage as nontax sources of revenue. The objective of this paper is to contrast the implications of two models designed to explain such anomalous policies. One approach, by Gordon-Li (2005), focuses on the greater difficulties faced in poor countries in monitoring taxable activity, and explores the best available policies given such difficulties. The other, building on Grossman-Helpman (1994), presumes that political-economy problems in developing countries are worse, leading to worse policy choices. The paper compares the contrasting theoretical implications of the two models with the data, and finds that the political-economy approach does poorly in reconciling many aspects of the data with the theory. In contrast, the forecasts from Gordon-Li model are largely consistent with the data currently available.

The influence of process gas type on the enamel surface condition of a high power diode laser generated single-stage ceramic tile grout seal

Almost all laser materials processing operations require the simultaneous use of an process or assist gas. This paper examines the use of O2, Ar, N2 and He as process gasses during the firing of a vitreous enamel to form a single-stage ceramic tile grout seal with a high power diode laser (HPDL) and the effects thereof on the surface condition of the glaze. The findings revealed marked differences in the surface condition of the HPDL generated enamel glaze depending upon the process gas used. The use of O2 as the process gas was seen to result in glazes with far fewer microcracks and porosities than those generated with any of the other three gasses, particularly He. Such differences were found to be due to the ability of the smaller O2 gas molecules to dissolve molecularly into the open structure of the HPDL generated enamel glaze and also, the inherent reactiveness of O2 which consequently effects exothermic reactions when it is used as a process gas. Both occurrences were seen, in turn, to affect the cooling rate and therefore the tendency of the molten glaze to generate microcracks when cooled