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Frontiers of Tax Research

Paper Session

Friday, Jan. 5, 2024 10:15 AM - 12:15 PM (CST)

Marriott Rivercenter, Conference Room 9
Hosted By: National Tax Association
  • Chair: Damon Jones, University of Chicago

The Role of Public Investments in Generating Property Wealth: Evidence from Cuyahoga County, Ohio

Valencia Prentice
,
Cleveland State University

Abstract

Place-based public investments are frequently used by local governments for neighborhood revitalization. In this study, we investigate one such type of intervention to determine whether it is successful in improving neighborhood quality, as measured by property values. Our analysis focuses on the impact of public investments, funded by the Community Development Block Group Grant (CDBG), on residential property values in Cuyahoga County, Ohio. Capitalization theory posits that if the market values the addition of public investments, then the demand for properties would rise in response to that addition, ultimately leading to an increase in property values. While existing research supports the capitalization effect of CDBG investments, few studies have explored the dynamic timing effects of capitalization. Using longitudinal parcel level data for the period 2000 to 2019, we employ a difference-in-differences model to examine the dynamic timing effects of CDBG intervention. The results show that CDBG projects have a positive and statistically significant impact on residential property values located within close proximity to intervention sites. The findings offer valuable policy guidance. By strategically targeting interventions in low-wealth neighborhoods, policymakers can enhance the property wealth of homeowners in those areas.

Fiscal Consequences of Corporate Tax Avoidance

Katarzyna Bilicka
,
Utah State University

Abstract

Multinational corporations shift a large share of their foreign profits to tax havens and, due to this corporate tax avoidance, governments lose a portion of their tax revenue. We study the consequences of multinational tax avoidance on the structure of government tax revenue. Using German municipal data we analyse how changes in municipal trade tax rates levied on corporate profits affect local tax revenue structure. Following a trade tax rate increase, we find that municipalities with high exposure to aggressive multinationals experience a significant decline in trade tax revenue levels and shares. They do not compensate for this decline with higher property tax rates or revenues and consequently see a decline in overall tax revenues.

The Effects of Child Care Subsidies on Paid Child Care Participation and Labor Market Outcomes: Evidence from the Child and Dependent Care Credit

Gabrielle Pepin
,
Upjohn Institute

Abstract

The Child and Dependent Care Credit (CDCC), a tax credit based on income and child care expenses, reduces child care costs for working families. The Economic Growth and Tax Relief Reconciliation Act expanded the CDCC in 2003, generating differential increases in generosity across states and family sizes. I document CDCC eligibility and expenditures across income and demographic groups over time. I show that a 10 percent increase in benefits increases paid child care participation by five percent and increases labor supply among married mothers. Labor supply responses among married mothers with very young children suggest benefits may increase long-run earnings.

Form-1099K for Gig Workers: Quantifying the 1099-K Gap and Impacts on Tax Compliance

Dmitri Koustas
,
University of Chicago

Abstract

A key challenge for measuring platform gig work in tax data after 2016 is the so called “1099-K gap,” where many platform gig workers earning less than $20,000 no longer received an information return. We combine federal tax return data with returns from states that introduced lower reporting thresholds to study the effects of this change. Incorporating state information returns in this setting allow us to make two key contributions in this paper: we quantify the size of the 1099-K gap and analyze how receipt of a 1099-K affects tax compliance. First, we present a new framework using returns from states that have lower reporting thresholds to provide a more complete estimate of total platform work. Our imputation methodology suggests raw counts underestimate platform work by approximately 770,000 workers by 2018. Second, we evaluate to what extent receipt of a 1099-K form affects tax compliance. We find that platform gig workers who received an information return reported on average $420 more in self-employment profits. Together these suggest an estimated $323.4 million in unreported profits due to the 1099-K gap.
JEL Classifications
  • H2 - Taxation, Subsidies, and Revenue
  • H0 - General