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  5. Distributional Effects of Taxation and Public Expenditures
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Distributional Effects of Taxation and Public Expenditures

Paper Session

Sunday, Jan. 8, 2023 10:15 AM - 12:15 PM (CST)

Hilton Riverside, Canal
Hosted By: American Economic Association
  • Chair: Siobhan O'Keefe, Davidson College

Beyond Assessment: Racial and Gender Disparities in Property Taxation

Luke P. Rodgers
,
Florida State University
Keith Ihlanfeldt
,
Florida State University

Abstract

Using a unique data set that identifies the race/ethnicity and gender of the homeowner, we measure group differences in key tax ratios affecting property tax bills for a large number of jurisdictions in Florida. Significant heterogeneity exists across jurisdictions, but there are important commonalties not previously documented. Consistent with prior studies, we find that initial property assessments are unfavorable to black and Hispanic homeowners relative to white homeowners. We find that assessment errors rarely explain differences in property tax bills, however. Much more consequential to measured disparities in property tax bills are group differences in benefits from tax relief programs, such as the homestead exemption and the assessment growth cap. Our analysis extends this area of research to also consider Asian homeowners, who face the most unfavorable burden of any group, and female homeowners, whose lower tax bills stem primarily from larger tax relief benefits.

Measuring the Effects of the Global Tax Reform - Evidence from High-Frequency Data

Roberto Gomez Cram
,
London Business School
Marcel Olbert
,
London Business School

Abstract

Over 140 countries agreed on a fundamental global corporate tax reform in 2021. The new framework includes a consumer-location-based profit taxation (Pillar 1) and a global minimum tax rate of 15% (Pillar 2). Using high-frequency asset price movements around the main events of the reform’s consensus process, we identify heterogeneous effects on individual companies’ and industries’ valuations as well as on countries’ public finances. We document that the stock prices of companies with a high share of foreign earnings and high levels of intangible assets like Apple Inc. and Alphabet Inc. drop significantly within minutes after the regulatory events. The price responses are persistent and grow in magnitude when focusing on longer time windows. At the country level, we document significant increases in credit default risk for countries like Ireland, Luxembourg, or small tax havens which attract disproportionately large amounts of companies’ profits under the current tax system. Collectively, our findings suggest that market participants expect the reform to impose significant costs on companies that pay relatively low taxes under the current system and reallocate a significant share of global corporate tax revenues to less developed countries with large consumer markets.

Drought-Reliefs and Partisanship

Federico Boffa
,
Free University of Bozen-Bolzano
Francisco Cavalcanti
,
Pontifical Catholic University of Rio de Janeiro
Christian Fons-Rosen
,
University of California-Merced
Amedeo Stefano Edoardo Piolatto
,
Autonomous University of Barcelona, Barcelona School of Economics, and Barcelona Institute of Economics

Abstract

Partisan bias when transferring funds from central to local governments is an established phenomenon.
We study the allocation of drought aid relief in Brazil. There, presidential and municipal elections alternate. We identify a novel pattern of distributive politics whereby the (expected) partisan bias disappears before presidential elections.
Furthermore, before mayoral elections, it fades for extreme (high or low) aridity levels while persisting for moderate levels, in which case alignment increases the probability of receiving aid relief by a factor of two (equivalent to 18.1 p.p.). We rationalise these findings in a model with symmetric information and office-motivated politicians.

Access to Public Goods within and across Local Governments: The Case of Road Quality

David Schönholzer
,
Stockholm University
Andrea Vallebueno
,
Stanford University

Abstract

Models in local public finance typically assume that local governments provide public goods of uniform quality across all neighborhoods, whereas those in urban economics assume amenities may vary freely across space. We study the distribution of road quality to estimate the degree to which access to public goods varies within and across local governments. We use a new dataset with more than 33,000 road segments across Los Angeles County, which covers all census tracts in its 88 cities and 80 school districts. To construct the data, we apply machine learning techniques to Google Street View imagery combined with administrative road quality measurements from two jurisdictions. We can then estimate the gradient of road quality with respect to household income both within and across local governments and search for spatial discontinuities in road quality across municipal boundaries. Finally, we investigate how the distribution of road quality differs between cities whose city council is elected at large as opposed to using electoral districts to gauge the contribution of electoral districts to the equitable distribution of road quality within local governments.
JEL Classifications
  • H2 - Taxation, Subsidies, and Revenue