Lunch séminaire de l’Observatoire européen de la fiscalité
Séminaire
Le séminaire a lieu à PSE-Ecole d’économie de Paris, 48 boulevard Jourdan et via Zoom. Vous pouvez vous inscrire à la liste de diffusion ici. Si vous souhaitez rencontrer l’intervenant, inscrivez-vous ici. Pour assister à distance, veuillez vous inscrire via ce lien.
La mobilité globale accrue des capitaux et de la main-d’œuvre pose un certain nombre de défis aux systèmes fiscaux nationaux : des structures internationales complexes servant à dissimuler la richesse individuelle aux yeux des administrateurs et des régulateurs fiscaux, des conflits sur l’attribution internationale des droits d’imposition, un paysage de la politique fiscale internationale en évolution rapide. Le séminaire se concentre sur le thème de la fiscalité dans l’économie mondiale et vise à rassembler des chercheurs internationaux, juniors et seniors, travaillant sur la fiscalité internationale, l’évasion et la fraude fiscales, la concurrence fiscale, l’harmonisation fiscale et d’autres sujets connexes. Les présentations peuvent être des documents finalisés ou des travaux en cours. L’objectif est d’apprendre les uns des autres et de discuter dans une atmosphère amicale.
Le séminaire est organisé par l’Observatoire européen de la fiscalité, un laboratoire de recherche financé par l’UE et hébergé par l’Ecole d’économie de Paris. Ce projet a reçu un financement de l’Union européenne (TAXUD/2022/DE/310).
Dates d’événements multiples
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What happens to earnings upon marriage? Linking administrative and survey data from Germany, we show that there is a marriage earnings gap. Even after accounting for the child penalty, women’s earnings drop by 20% after marriage. We show that the marriage earnings gap results from both the extensive margin (women stop working) and the intensive margin (women work fewer hours), but not from a decrease in hourly wages. Labor supply disincentives from joint taxation can explain about one quarter of the marriage earnings gap, while we find no effect for labor supply incentives from changes in divorce law. Leveraging variation in norms created by the German separation, we find that gender norms are another important driver behind the marriage earnings gap.
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Tax avoidance by redirecting royalty flows: estimating the global revenue loss
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Redirecting royalty payments across jurisdictions is a well-known strategy of large multinationals to reduce corporate income taxation. The global impact of these taxes on the direction and size of the royalty payments is, however, seldom investigated. From our network analysis, based on national and bilateral tax rates, we infer which bilateral payments could be tax motivated and which could only be business motivated. Next, we apply a gravity framework with PPML estimators to explain the variation in the latter payments. Using these regression outcomes to predict the business motivated content of the other royalty payments, we find that 13% to 25% of all flows is motivated by tax planning, which reduces tax revenues by 6.5 to 16 billion US dollar in 2018 in our preferred specification. We argue that both estimates are lower bounds, mainly due to missing observations. To the best of our knowledge these are the first estimates of worldwide tax avoidance by redirecting royalties. -
Taxing Wealth in the Presence of Liquidity Constraints: Evidence from France
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Real-world wealth taxes include income-based caps to make sure income-poor yet wealth-rich households do not have to sell illiquid assets. We show in the French context that these caps are binding mostly among households at the top of the wealth distribution who own liquid yet income-tax-deferred assets. When the wealth tax was cancelled in 2017, these households quickly generated taxable income out of those financial assets. Inversely, when the wealth tax cap was temporarily suspended in 2012, they did not turn those assets into income in order to pay the tax. We conclude that caps reduce the proceeds from wealth taxes precisely when wealth would be a better proxy for taxpaying ability than income.
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Discretion versus Algorithms: Bureaucrats and Tax Equity in Senegal
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The implementation of government programs requires a list or register of individuals who are eligible for the program. Building these registers accurately is a challenge in contexts with low administrative capacity, and is often the responsibility of bureaucrats. We study the impacts of giving such bureaucrats more (or less) discretion in building these registers in the context of the creation of the first digitized property tax register in Senegal. We randomly assign neighborhoods to valuation methods with different degrees of bureaucrat discretion and compare the registered property values against a benchmark of market values provided by licensed real estate assessors. Bureaucrats in full discretion areas undervalue properties, and more so for higher-value properties, resulting in a regressive tax profile. The median tax rate is 3.8% in the lowest quintile and 1.7% in the top quintile, instead of the expected 4.4% and 8.6% rates based on the tax code. In contrast, a rule-based system where bureaucrats record property characteristics (not values) that an algorithm then uses to compute values, significantly reduces this tax gap. A pure rule with no bureaucrat inputs yields the highest accuracy and equity. We show this is due to bureaucrats’ lack of knowledge about high-end properties and their fairness concerns, and not due to collusion between bureaucrats and property owners.
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How (in)efficient are governments? Evidence from matched customs transactions data
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How (in)efficient are governments? Using matched firm-to-firm import transaction data from Colombia, India, Indonesia, Mexico, and Vietnam, this paper shows that government entities and state-owned enterprises tend to pay substantial price premia relative to private firms when purchasing the same products from the same suppliers. These premia are particularly elevated in regions with limited state capacity, and show no correlation with subnational variation in indicators of corruption. If governments would procure goods at the same prices as the private sector they could reduce their import expenditure by up to 58%.
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Controversial Preferential Tax Treatments for Multinational Enterprises in the EU: Evidence from Spain
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Prior research attributes the lower tax burden of multinational enterprises (MNEs) primarily to tax avoidance and evasion. This paper examines the role of preferential tax treatments as an additional factor explaining the tax advantages of MNEs over domestic firms. Using a quasi-experimental design and panel data from 2011 to 2018, I assess the impact of a temporary decision by the EU General Court, which overturned the European Commission’s ruling against a Spanish tax scheme. This scheme enabled firms taxable in Spain to amortize financial goodwill of foreign acquisitions, a benefit particularly favorable to MNEs. The results indicate a substantial reduction in the effective tax rates of MNEs following the General Court’s decision. These findings suggest that national tax policies, beyond income shifting, can intentionally create tax disparities between multinational and domestic firms. -
This paper investigates how firms adapt their sourcing of clean and dirty inputs in response to changes in climate policy. We use information from the European Union’s Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM) to create a new classification of clean and dirty products based on whether they are subject to a domestic or a border carbon tax. We then combine this dataset with French firms’ product-level import data over 2000–2019 and estimate that firms’ propensity to import dirty inputs from non-EU countries increased in the 2010s, reflecting carbon leakage. A heterogeneous firm model is then used to quantify the impact of changes in firms’ sourcing of clean and dirty inputs given the implementation of a carbon tax and a carbon tariff. The simulated ETS carbon tax scenario is able to match leakage observed in the data and leads to a higher price level and a modest decline in emissions. The scenario that further includes the CBAM carbon tariff reverses carbon leakage at the cost of an additional rise in prices. Overall, household welfare declines because the higher costs associated with the carbon policies outweigh the benefits of reduced emissions.
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When Private Firms Provide Public Goods: The Allocation of CSR Spending
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This paper studies how firms allocate their Corporate Social Responsibility (CSR) expenditures to shed light on the potential welfare effects of corporate contributions to public goods. We use a novel dataset covering the universe of the CSR expenditures of large Indian firms over the period 2015-2019, which includes detailed information on the projects and social topics (e.g. health, education) firms invest in. We start by documenting stylized facts about CSR, we find in particular that firms allocate their CSR expenditures across topics in a similar way to other public good providers. Using natural language processing we then construct an index of the technological proximity between industries and topics to capture how much firms’ production technologies give them a comparative advantage in a topic. We find that firms spend more on topics they have a comparative advantage in, consistent with an efficient allocation of CSR expenditures across topics and the main rationale for CSR in the literature. Looking across locations, however, we find that firms spend more in areas where social returns are low; CSR spending seems less equitably allocated than government expenditures. -
The Gains from Foreign Multinationals in an Economy with Distortions
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The paper is co-authored with Mauricio Ulate, Jose P. Vasquez, and Roman David Zarate. We study the local and aggregate welfare effects of foreign multinational enterprises (MNEs) in an economy with multiple distortions. First, we leverage rich microdata on all establishments in Mexico from 1994 to 2019, including domestic formal and informal ones, as well as foreign MNEs within or outside the maquila program. We construct direct measures of establishment-level distortions such as the burden of crime and corruption, labor taxes, and production subsidies. We find that, on average, domestic formal establishments face more distortions than informal ones, while foreign maquila MNEs are the least distorted among formal establishments. Distortions also vary significantly across commuting zones (CZs) in Mexico. Second, using an instrumental variable strategy, we show that an increase of one MNE worker per capita in a CZ raises domestic employment by 0.33 workers per capita. This growth mainly occurs in formal establishments, reducing the share of informal employment within local employment. Only non-maquila MNEs have positive effects on the local domestic economy. Third, we develop a quantitative model highlighting the ex-ante ambiguous role distortions can play in amplifying or attenuating the welfare effects of foreign MNEs. We use the IV estimates and the initial distortion measures to calibrate the model and quantify the GE effects of foreign MNEs. Simulating a 10% productivity shock of MNEs, we find that their expansion in Mexico (1994–2019) led to 6% aggregate welfare gains, with a quarter of the gains from reallocation effects and a fifth from local productivity spillovers.
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We investigate the welfare implications of property taxation. We apply a sufficient statistics approach that accounts for the distributional effects of tax changes at the household level within a spatial equilibrium framework. We show that equity effects are driven by price adjustments in the housing and labor markets, while efficiency is determined by changes in public goods. Using microdata and exploiting 5,500 municipal property tax changes in Germany, where assessed housing values remain constant, we find that 83 percent of the tax burden is passed through to rental prices, with modest labor market effects. Simulations of the welfare effects of property taxes reveal that the price effects of property tax hikes are regressive. Despite low efficiency costs of the tax, it becomes distributionally neutral only if public good preferences are very high.
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This paper analyzes the interactions between redistribution and unemployment insurance policies and their implications for the optimal design of tax-benefit systems. In a setting where individuals with different earnings abilities are exposed to unemployment risk on the labor market, I characterize the optimal income tax schedule and the optimal unemployment benefit schedule in terms of empirically estimable sufficient statistics. I provide a Pareto-efficiency condition for tax-benefit systems that implies a tight link between optimal redistribution and optimal unemployment insurance: the steeper the profile of income taxes is, the flatter the profile of unemployment benefits should be, and vice versa. Optimal replacement rates are therefore monotonically decreasing with earnings, from 1 at the bottom of the earnings distribution to 0 at the top, and redistribution through unemployment benefits is efficient. Empirical applications show that these interactions between redistribution and unemployment insurance have important quantitative implications.
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Policies that impact the production sector, such as intermediate goods taxation (e.g. taxing robots) and trade liberalization create winners and losers. When do we need to integrate pre-distribution concerns in the design of these production policies? Should we consider the endogenous changes of factor prices in tax formulas? We show that the answers to these two questions depend only on the features of the income tax system. More precisely, can the tax system distinguish incomes from each factor of production? Can it be reformed along the so-called “GE-replicating directions”, reproducing the impact of factor price adjustments on taxpayers’ utility? If the answer to either question, or both, is “no”, the design of production policies should also take into account its predistributive role and all formulas reveal novel, empirically implementable “GE multipliers”. These multipliers shape tax systems to correct for market failures as well as for the price incidence effects. In contrast, if the answer to both questions is “yes”, it is Pareto-improving to design production policies solely to enlarge production possibilities and the “GE multipliers” shape the income tax system only to account for market failures. We illustrate these insights with realistic tax systems and practical examples of production policies.
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