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Niall Farrell - One of the best experts on this subject based on the ideXlab platform.
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What Factors Drive Inequalities in Carbon Tax Incidence? Decomposing Socioeconomic Inequalities in Carbon Tax Incidence in Ireland
Ecological Economics, 2017Co-Authors: Niall FarrellAbstract:Abstract Carbon Taxes increase the cost of necessary household energy expenditures. In many developed countries, carbon Taxes are regressive as they comprise a greater proportion of a poorer household's income. Certain socioeconomic groups are more negatively affected by these impacts than others. While inequality of Incidence by income group has received great attention in the literature, a gap exists to quantify the inequality associated with socioeconomic characteristics. This information is policy-relevant as it may inform the most effective means to offset negative welfare impacts through changes to Taxes and/or social transfers. This paper provides this contribution. First, the inequality of carbon Tax Incidence across the income spectrum is quantified using the concentration index methodology. A subsequent multivariate decomposition quantifies the contribution each socioeconomic factor makes towards this inequality of Incidence. This is carried out for electricity, motor fuel and all other home fuels to elicit variation of socioeconomic Incidence by source. While income contributes a great deal towards inequality of Incidence for other home fuels, other socioeconomic characteristics are the primary determinants of electricity and motor fuel-related carbon Tax Incidence. The relative importance of each characteristic in determining regressive impacts is quantified and this varies by carbon Tax source.
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What Factors drive Inequalities in Carbon Tax Incidence? Decomposing Socioeconomic Inequalities in Carbon Tax Incidence in Ireland
2015Co-Authors: Niall FarrellAbstract:Carbon Taxes increase the cost of necessary household energy expenditures. In many developed countries, carbon Taxes are regressive as they comprise a greater proportion of a poorer household’s income. Certain socioeconomic groups are more negatively affected by these impacts than others. While inequality of Incidence by income group has received great attention in the literature, a gap exists to quantify the inequality associated with socioeconomic characteristics. This information is policy-relevant as it may inform the most effective means to offset negative welfare impacts through changes to Taxes and/or social transfers. This paper provides this contribution. First, the inequality of carbon Tax Incidence across the income spectrum is quantified using the concentration index methodology. A subsequent multivariate decomposition quantifies the contribution each socioeconomic factor makes towards this inequality of Incidence. This is carried out for electricity, motor fuel and all other home fuels to elicit variation of socioeconomic Incidence by source. While income contributes a great deal towards inequality of Incidence for other home fuels, socioeconomic characteristics are the primary determinants of electricity and motor fuel-related carbon Tax Incidence. The relative importance of each characteristic in determining regressive impacts is quantified and this varies by carbon Tax source.
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What Factors Drive Inequalities in Carbon Tax Incidence? Decomposing Socioeconomic Inequalities in Carbon Tax Incidence in Ireland. ESRI WP519. November 2015
2015Co-Authors: Niall FarrellAbstract:Carbon Taxes increase the cost of necessary household energy expenditures. In many developed countries, carbon Taxes are regressive as they comprise a greater proportion of a poorer household’s income. Certain socioeconomic groups are more negatively affected by these impacts than others. While inequality of Incidence by income group has received great attention in the literature, a gap exists to quantify the inequality associated with socioeconomic characteristics. This information is policy-relevant as it may inform the most effective means to offset negative welfare impacts through changes to Taxes and/or social transfers. This paper provides this contribution. First, the inequality of carbon Tax Incidence across the income spectrum is quantified using the concentration index methodology. A subsequent multivariate decomposition quantifies the contribution each socioeconomic factor makes towards this inequality of Incidence. This is carried out for electricity, motor fuel and all other home fuels to elicit variation of socioeconomic Incidence by source. While income contributes a great deal towards inequality of Incidence for other home fuels, socioeconomic characteristics are the primary determinants of electricity and motor fuel-related carbon Tax Incidence. The relative importance of each characteristic in determining regressive impacts is quantified and this varies by carbon Tax source.
F.l. Verboven - One of the best experts on this subject based on the ideXlab platform.
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quality based price discrimination and Tax Incidence evidence from gasoline and diesel cars
2002Co-Authors: F.l. VerbovenAbstract:The existing Tax policies toward gasoline and diesel cars in European countries provide a unique opportunity to analyze quality-based price discrimination and the implied Tax Incidence. In my econometric framework, consumers choose the type of engine based on their annual mileage; prices are set by the manufacturers. The relative pricing of gasoline and diesel cars appears to be consistent with monopolistic price discrimination, effectively segmenting low-mileage from high-mileage consumers. On average, about 75% to 90% of the price differentials between gasoline and diesel cars can be explained by markup differences. I draw implications for the effectiveness and the revenue effects of Tax policy.
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quality based price discrimination and Tax Incidence the market for gasoline and diesel cars in europe
The RAND Journal of Economics, 2002Co-Authors: F.l. VerbovenAbstract:The existing Tax policies toward gasoline and diesel cars in European countries provide a unique opportunity to analyze quality-based price discrimination and the implied Tax Incidence. In my econometric framework, consumers choose the type of engine based on their annual mileage; prices are set by the manufacturers. The relative pricing of gasoline and diesel cars appears to be consistent with monopolistic price discrimination, effectively segmenting low-mileage from high-mileage consumers. On average, about 75% to 90% of the price differentials between gasoline and diesel cars can be explained by markup differences. I draw implications for the effectiveness and the revenue effects of Tax policy.
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Price discrimination and Tax Incidence: Evidence from gasoline and diesel cars
1998Co-Authors: F.l. VerbovenAbstract:The existing Tax policies towards gasoline and diesel cars in European countries provide a unique opportunity to analyze quality-based price discrimination and implied Tax Incidence. We develop an econometric framework for the demand and pricing of gasoline and diesel cars. Consumers choose a gasoline or a diesel car based on their annual mileage. Manufacturers set gasoline and diesel car prices. Our empirical results show that the relative pricing of gasoline and diesel cars is consistent with price discrimination of a monopolistic type, and inconsistent with competitive models of pricing. On average, about 70 to 85 percent of the price differentials between gasoline and diesel cars can be explained by markup differences. The implied Tax Incidence is especially based on fuel Taxes and less so on annual car Taxes
Kellya. Bluck - One of the best experts on this subject based on the ideXlab platform.
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The Treatment of Transfers in the Measurement of Sales Tax Incidence: the Case of Canada's Manufacturers' Sales Tax
Public Finance Review, 1992Co-Authors: Giuseppe C. Ruggeri, Kellya. BluckAbstract:The purpose of this article is twofold: to determine the appropriate treatment of the Abstract indexation of transfer payments in sales Tax Incidence and to apply the methodolog ical results to measure the Incidence of Canada's Manufacturers'Sales Tax (MST). The article argues that, when measuring sales Tax Incidence in the presence of transfers, appropriate adjustments must be made only for the actual degree to which transfers are indexed. The article suggests that the effects of full or partial indexing are measured correctly by treating indexing as a negative Tax. This adjustment is made automatically by using a distributional measure of Incidence based on a comparison of preTax and postTax income. The empirical results indicate that when indexing of transfers is ignored, the MST is mildly regressive. When partial indexing is included and treated as a negative Tax, the MST is progressive at the lower end of the income scale, but remains regressive at the top end.
Mark Skidmore - One of the best experts on this subject based on the ideXlab platform.
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Perfect Competition, Urbanization, and Tax Incidence in the Retail Gasoline Market
Economic Inquiry, 2009Co-Authors: James Alm, Edward Sennoga, Mark SkidmoreAbstract:I. INTRODUCTION In applied Tax Incidence studies, it is typically assumed that prices respond one-for-one to changes in sales and excise Taxes (Chernick and Reschovsky 1997; Pechman 1985; Shepard 1976; State of Wisconsin Department of Revenue 2004; Wiese, Rose, and Schluter 1995; Zupnick 1975). Is this assumption reasonable? Despite the fundamental role of Tax Incidence in the study of public finance, there is surprisingly little empirical analysis that sheds light on who bears the burden of Taxes. In this article, we examine the Incidence of state gasoline excise Taxes using monthly price data for all 50 states in the United States over the period 1984-1999. Our estimation results generally indicate full shifting of gasoline Taxes to the final consumer, with changes in gasoline Taxes fully reflected in the Tax-inclusive gasoline price almost instantly. We also find that the Incidence of excise Taxes depends on the competitiveness of retail gasoline markets (e.g., urban vs. rural markets). Gasoline markets in urban states typically exhibit full shifting, but those in rural states demonstrate somewhat less than full shifting. Although the issue of sales and excise Tax Incidence has received considerable attention over the years, most research has focused on Tax Incidence theory, and the standard conclusion of much of this theoretical analysis is that consumers bear the full burden of any sales and excise Taxes. (1) Based primarily on this theoretical foundation, most applied Incidence studies assume that sales and excise Taxes are fully reflected in consumer prices, and the distribution of Tax burdens across income classes necessarily reflects this assumption. However, actual empirical testing of this assumption of full forward shifting has been surprisingly sparse. (2) In important recent research, Poterba (1996) and Besley and Rosen (1999) have conducted empirical analyses of the Incidence of excise Taxes. Poterba (1996) uses city-specific clothing and personal care price data covering the 1947-1977 and the 1925-1939 periods to examine the degree to which state and local retail sales Taxes are shifted to consumers, with two data sets based on Bureau of Labor Statistics (BLS) city-specific consumer price indices. Using these BLS data on Tax-inclusive prices, Poterba (1996) constructs quarterly price indices for each of 28 Standard Metropolitan Statistical Areas (SMSAs). Many of these 28 SMSAs experienced significant changes in sales Tax rates, and Poterba (1996) uses these Tax "shocks" to determine the Incidence of sales Taxes. His estimation results are somewhat variable, but in general he finds for the postwar period that Taxes are fully shifted to consumers; in some cases, he finds limited evidence of overshifting, although it is never possible to reject the null hypothesis that prices rise "point-for-point" with the changes in the Tax, and he also finds that full shifting typically (though not always) occurs in the first quarter of the Tax change. Poterba (1996) also examines Tax Incidence for individual SMSAs during the Depression era, and his results indicate significant differences across metropolitan areas in the degree of Tax shifting. For example, prices on women's clothing in Chicago show significant overshifting, but Atlanta shows negative shifting, a result that does not seem plausible. Besley and Rosen (1999) also examine the Incidence of sales Taxes using price data for 12 narrowly defined commodities in 155 different U.S. cities, using quarterly price data for the period 1982-1990 issued by the American Chamber of Commerce Researchers Association (ACCRA). (3) They not only find full shifting for a number of commodities but also find overshifting for more than half the products, a result they attribute to imperfect competition in the retail sector. While this recent empirical research has significantly expanded our understanding of the actual nature of sales and excise Tax Incidence, we believe that our work here on gasoline excise Taxes makes several contributions to the empirical literature. …
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perfect competition spatial competition and Tax Incidence in the retail gasoline market
2005Co-Authors: James Alm, Edward Sennoga, Mark SkidmoreAbstract:In this paper we use monthly gasoline price data for all fifty U.S. states over the period 1984 to 1999 to examine the Incidence of state gasoline excise Taxes. Standard economic theory predicts full shifting of the excise Tax to consumers when the supply of gasoline is perfectly elastic, and our empirical results are largely consistent with this prediction. In general, we find full shifting of gasoline Taxes to the final consumer, with changes in gasoline Taxes fully reflected in the Tax-inclusive gasoline price almost instantly, a result consistent with a retail gasoline market in which firms are perfectly competitive and produce at constant cost. In addition, although we find that gasoline retail prices demonstrate asymmetric responses to changes in gasoline wholesale prices, we find only limited evidence of such behavior for retail prices with respect to gasoline excise Taxes. Importantly, we also present a novel application of a spatial price discrimination model to examine Tax Incidence in markets that are not perfectly competitive. In this alternative framework, the Incidence of excise Taxes depends upon the competitiveness of retail gasoline markets, which depends in turn on spatial aspects of the market. Consistent with this alternative theoretical framework, our empirical estimates demonstrate that gasoline markets in urban states exhibit full shifting, but those in rural states demonstrate somewhat less than full shifting.
Jennifer C. Gravelle - One of the best experts on this subject based on the ideXlab platform.
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Corporate Tax Incidence: Review of General Equilibrium Estimates and Analysis
National Tax Journal, 2013Co-Authors: Jennifer C. GravelleAbstract:This paper identifies the major drivers of corporate Tax Incidence in open-economy general equilibrium models and compares estimates from four major studies. These studies vary in their elasticity assumptions, and adjusting the estimates to reflect central empirical estimates of those elasticities suggests capital bears the majority of the corporate income Tax burden. This paper further presents an alternative method for determining corporate Tax Incidence that distinguishes between global effects of corporate Taxes and excise effects that vary among nations. Under this approach, even in an open economy, capital could bear virtually the entire Tax burden.
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corporate Tax Incidence review of general equilibrium estimates and analysis
Revista de Economía Institucional, 2011Co-Authors: Jennifer C. GravelleAbstract:This paper reviews the current evidence on the Incidence of the corporate Tax from Harberger-type general equilibrium models, with special attention to the open economy. The analysis identifies the major drivers of the results from open-economy models and compares estimates from four major studies that have examined corporate Tax Incidence in an open economy. The studies vary in the assumptions of critical elasticities, and the variations account for differences in the reported estimates. Adjusting the estimates from the studies to reflect central empirical estimates of key elasticities suggests that capital bears the majority of the corporate Tax burden. This paper details drawbacks to the use of these models, such as their focus on the long-run when the adjustment from the short-run could be very long. The paper also presents an alternative method for allocating the corporate Tax burden. The proposed method draws on the new view of Incidence of the property Tax and, in a similar fashion, distinguishes between the global effects of corporate Taxes and excise effects that vary among nations. In this view, capital bears the full burden of the worldwide average corporate Tax. Deviations from the average worldwide corporate Tax are allocated according to the central estimate derived from the review of the general equilibrium models of corporate Tax Incidence. This alternative method suggests that, even in an open economy, capital could bear virtually the entire Tax burden and that the open-economy assumption is not sufficient to shift the burden of the corporate Tax from capital to labor.
