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Marriott Marquis, Balboa
American Economic Association
Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM (PDT)
- Chair: Danny Yagan, University of California-Berkeley
Capital Gains Taxes and Real Corporate Investment
AbstractThis paper assesses the effects of capital gains taxes on investment by exploiting a unique institutional setting in Korea, where the capital gains tax rates vary by firm size. I use a difference-in-differences design that compares the outcomes of firms whose tax rates were reduced, due to an unanticipated reform in 2014, to the outcomes of unaffected firms. I find that firms whose capital gains tax rates dropped from 24 percent to 10 percent increased investment by 48 log points, with the implied medium-run elasticity of 2.6 with respect to the net of tax rate, and increased newly issued equity by 5 cents per dollar of lagged revenue. The effects of the tax cut were larger for firms that appeared more cash-constrained, suggesting that these firms faced a higher marginal cost of investment, and for firms that appeared to have more agency conflicts. Taken together, these findings are consistent with a class of the ``traditional-view'' models predicting that lower capital taxes spur equity-financed investment by increasing the marginal returns on investment.
Carbon Pricing of International Transport Fuels: Impacts on Carbon Emissions and Trade Activity
AbstractWe study impacts of carbon pricing for international transport fuels on fuel consumption and carbon emissions, trade activity, and welfare, focusing on sea freight which constitutes the most important international trade transport activity. We use the WITS global dataset for international trade for the years 2009-2017 to estimate the impacts of changes in the global average bunker fuel price on the weight times distance for goods transported, and on bunker fuel consumption and carbon emission from international shipping. We find quite strong but variable negative effects of fuel cost increases on weight times distance for traded goods, and on carbon emissions from sea freight, for the heaviest goods categories at the 6-digit HS levels of aggregation in global trade, with elasticities ranging from -0.0028 up to -0.64. Considering an increase in the bunker fuel price as a proxy for a fuel tax, our results then indicate substantial impacts of bunker fuel taxes on the volume of sea transport, on bunker fuel consumption, and on carbon emissions from the international shipping sector. Our results indicate that a global $40 per ton CO2 tax on carbon emissions from ships will reduce carbon emissions from the global shipping fleet by about 4% for the goods categories considered.
How to Improve Tax Compliance? Evidence from Population-Wide Experiments in Belgium
AbstractWe study the impact of deterrence, tax morale, and simplifying information on tax compliance. We ran five experiments spanning the tax process which varied the communication of the tax administration with all income taxpayers in Belgium. A consistent picture emerges across experiments: (i) simplifying communication increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not eective. Even tax morale messages that improve knowledge and appreciation of public services do not raise compliance. In fact, heterogeneity analysis with causal forests shows that tax morale treatments backre for most taxpayers. In contrast, simplication has large positive effects on compliance, which diminish over time due to follow-up enforcement. A discontinuity in enforcement intensity, combined with the experimental variation, allows us to compare our letter treatments against standard enforcement measures. The simplication treatments are far more cost-effective, allowing for substantial savings on enforcement costs, and also improve compliance in the next tax cycle.
On the Differential Impact of the Tax Cuts and Jobs Act on the Housing Market: Blue versus Red
AbstractThis paper identifies and estimates the differential impact of the Tax Cuts and Jobs Act (TCJA) on the housing market, in particular, on the (median) price-to-rent ratio between the metropolitan statistical areas (MSAs) in the blue states and those in the red states by using a difference-in-differences approach. Employing the relevant data from 2017Q1 to 2018Q4 for the top 50 MSAs to implement the analysis, we find that the differential impact is positive and statistically significant, and that its magnitude increases with time. Our findings suggest that taxation plays an important role in the housing market.
- H2 - Taxation, Subsidies, and Revenue