PRICE UNCERTAINTY,FACTOR SUBSTITUTION,AND THE LOCATIONAL BIAS OF BUSINESS TAXES*

Consideration of the integrated production-location problem is extended to include several types of business taxes. Many of these taxes are technologically and spatially neutral under certainty, but are shown to be nonneutral when factor prices are stochastic and the firm is risk averse, even when the tax is spatially uniform. Consequently, even a nationally uniform tax can have regional biases and can encourage migration of plants. When factor prices are uncertain, the effects of taxes on output rates, input ratios, and plant location vary with the form of the tax imposed as well as the amount to be paid. Income taxes involve the taxing authority in sharing the risk with the firm and are shown to promote risk taking by the firm and induce the expansion of output. Locational incentives which are mutually beneficial to firms and the government are presented.     

The determinants of county growth

The determinants of population and employment growth were explored from a broader interregional (as opposed to intraregional) perspective. Data for the 1970s, at the county level of disaggregation, were used to analyze the effects of economic, demographic, and climatic variables on population and employment growth in a simultaneous equation framework. The use of data from the more than 3000 US counties provides a considerably larger testing ground than those used in previous research. The point of departure was a conventional, general equilibrium model in which both households and producers are geographically mobile. The study's dependent variables refer to population, total, and manufacturing employment densities. Family income had a powerful effect in stimulating both population and employment density. A 10% increase in family income led to a 7.9% increase in total and a 9.2% increase in manufacturing employment densities. High family income must stand for high demand, and thus, firms are drawn to an area. High family income also drew households to an area. A 10% increase in family income led to a 5.5% increase in population density. High family income must represent "good" neighborhoods for households. High family income was positively correlated with population and employment density, but in other recent studies either a negative and significant relationship or an insignificant relationship were reported. Local taxes consist of the receipts of county government and those of municipalities, townships, school districts, and special districts within the county. The elasticities reported in Table 4 suggest that a 10% increase in such taxes resulted in about a 0.072% reduction in county population density during the decade. The Industrial Revenue Bonds (IRBs) and the percent of the labor force that is unionized are 2 potential policy instruments at the state level. The study results suggest that IRBs have not stimulated either manufacturing or total employment, and the coefficients were statistically insignificant in the structural equations. The elasticities imply that a 10% increase in percent union reduces total employment by 0.42% and manufacturing employment by 0.18%. The effect on population was tiny. Further, while not intended, the interstate highway program may have been a significant redistributor of population and employment but has not caused immigration of people and jobs from central cities.     

民国时期地方税收权力的流失——以1939—1949年重庆营业税为中心的考察

抗战全面爆发以后,重庆由四川省辖市升级为院辖市,逐步建立起独立的地方财政税收制度。作为地方税收的大宗,营业税本是重庆市政府增加财政收入的重要途径,但是,重庆市营业税权力却遭到四川省政府、中央政府、重庆市商人团体和参议会的分割、侵蚀而流失。以营业税为主的地方税收权力大量流失,直接导致地方财政困乏,也是影响国家政权稳定的重要因素之一。     

THE MARKET VALUE OF ENVIRONMENTAL IMPROVEMENTS IN ALTERNATIVE FISCAL REGIMES*

ABSTRACT Land price differentials have long been used as a proxy for the value of environmental improvements in cost/benefit analysis. Both the empirical and theoretical literatures have largely ignored two important facts, however: Taxes financing local improvements are often distortionary, and amenities which influence property values in turn impact the fiscal budget, and hence the tax rate and final economic burden. Put another way, the economic cost of an improvement is endogenous to both the amenity level and the revenue structure. Extending the story in this direction for a system of open or closed spatial cities, the paper finds land rent measures to be a biased measure of the willingness to pay for amenities financed by either head taxes (benefit taxes), property taxes (excise taxes), or highway tolls (user fees). These results are used to correct the conventional specification of empirical property value regression models, which traditionally account for neither tax revenue effects nor the excess burden of distortionary taxation.     

Not My Taxes! Explaining Tax Resistance and its Implications for Australia's Welfare State

In discussing Australia's need to increase taxes to pay for future social security, Michael Keating worries that voters see taxes as a ‘burden’ and that ‘the link between taxation and citizenship has been broken’. This paper deals with the problem of tax resistance (preferring lower taxes even when tax cuts risk public services) for Australia's welfare state. First, I describe how two Australian fiscal institutions—a residual welfare system and visible income taxes—promote tax resistance among voters. Second, I draw on these insights to develop several explanations for tax resistance: voter self-interest, voter hostility to minorities, voter disengagement (low trust and lack of interest in politics), and individualistic attitudes. The main conclusion is that tax resistance in Australia is institutionalised, making it easier to mobilise interests around low taxes, and harder to advocate for alternatives. Results of multivariate analysis using AES 2004 data indicate that an ‘anti-tax coalition’ can build on three diverse publics; one of higher and middle-income earners attuned to self-interest, another hostile to welfare beneficiaries, and another ‘tuned out’ of politics and willing to support any call for tax cuts. Inevitably, the debate about the welfare state is shadowed by a debate about voter willingness to pay taxes that finance it.     

Trade policy,climate change and the greening of business

There is under way a worldwide greening of industry, driven by the huge demand generated by China and India as emerging industrial giants whose growth cannot be accommodated by ‘business as usual’ fossil-fuelled development—for reasons having as much to do with energy security as concerns over global warming and climate change. While the role played in this process by fiscal and industry policies (e.g. carbon taxes and other market-based incentives) is well understood (even if not pursued currently in Australia), the potentially powerful leverage to be exercised by trade policy is under-recognised. There are some positive developments such as a proposed Environmental Goods Agreement being discussed in Geneva, while there are negative developments embodied in various bilateral and regional trade agreements such as the proposed Trans-Pacific Partnership (TPP) agreement, to which Australia has committed itself. There are rising levels of conflict over trade and climate change mitigation measures, in actions brought at the WTO against countries looking to promote green industries through measures like local content requirements being attached to foreign direct investment, or by countries imposing border tax adjustments against exporters who allegedly fail to implement carbon taxes. The issues involved are discussed in this paper and possible ways forward are proposed, along with some implications for Australia.     

Who Pays the Costs of Inflation?

Inflation may be looked upon as a deferred consumption tax which reduces consumer purchasing power through high prices to compensate for earlier excess expansions of credit. A portion of this excess borrowing is by government to finance deficits. The inflation cost may then be compared by family–income class with the alternative income taxes needed to avoid inflation by eliminating the deficits. By this calculation for 1965–75, the inflation cost was highly regressive, with an effective rate of 17 percent on. families below $5,000, and 17 times greater than such families would have had to pay in income taxes. Meantime, the effective inflationary tax rate for wealthy families over $50,000 in income was a bonus, or tax rebate, of one percent.     

The Politics of Motor Fuel Taxes and Infrastructure Funds in France and the United States

The US. and France have adopted contrasting models of motor fuel tax and highway finance policy. Fuel tax revenues are dedicated to state and federal highway funds in America, keeping taxes quite low, but preventing them from contributing to the general treasury. French motor fuel taxes are higher and make up nearly 11 percent of the central government's general revenues, excluding social security contributions. French highway finance relies heavily on tolls. Pressure from the US. federal deficit has reduced the highway trust fund's ability to protect highway spending from budgetary competition. Political and procedural changes in Congress make it likely that the U.S.will move away from exclusive dedication of motor fuel taxes.     

清末印花税的筹议与实施

印花税系晚清时期由西方国家传入中国的一大税种,在财政困绌、赔款筹措和洋务新政等因素的促动下,朝野人士多有论介,间或付诸实施,也因民间反对甚力,不免虎头蛇尾,成效未具.1906年鸦片禁政推行后,鸦片税厘开始缩减,为了抵补洋土药税收,度支部匆忙之间筹划研究,短时间内制定了印花税实施的有关章程,希图依靠该税筹措经费,达到抵补鸦片税的目的.无奈清末中央与地方财政关系复杂,民间反对甚烈,印花税不得不日渐式微,成效不大.     

DEPRECIATION PROFILES AND DEPRECIATION POLICY IN A SPATIAL CONTEXT*

This paper demonstrates that the treatment of depreciation in the federal tax code is nonneutral not only with respect to assets and industries, as demonstrated in a number of recent studies, but also with respect to location. Using a unique set of data for manufacturing plants in Los Angeles and Philadelphia, the paper shows that the 1981 Tax Act's reduction of equipment lives to five years is likely to create differences in effective tax rates and wedges between the sample metropolitan areas for groups of plants with the same two-digit industrial classification. These are attributable to spatial differences in corporate tax rates and the type and quality of assets used. The paper concludes by explaining how the results can be generalized to other sectors and metropolitan areas, and by noting some implications for policy.     

Regulating Local Tax Abatement Policies

This article addresses several questions about property tax. abatements in the United States, all directed at why tax abatements should be regulated more closely, and one question about how this might be accomplished. First, are tax abatements “job increment financing” since they are exchanged for future jobs? Public decisionmakers assume that jobs mean tax revenues, but problems emerge when abatements are granted without knowledge of expected jobs, or if local government administrators and planners have no means of holding businesses accountable if their promises are not kept. Second, are local decisionmakers behaving imprudently when they abate multiyear taxes? Using abatements may not always be a particularly prudent way of using public resources. Third, can tax abatements undermine local democracy? Abatements weaken public involvement in city government when citizens have few opportunities to debate decisionmakers about tax exemptions, but they should have such a chance because abatements have costly, longlasting effects on current and future citizens. Fourth, do abatements create social costs? Tax abatements generate external effects for those who are not party to the politics of tax exemptions, but there are no easy answers about how to correct the externalities. Finally, what are the options for stopping tax abatements? These include federal prohibition, cooperative agreements, federal fiscal incentives, the courts, tougher negotiating tactics, and more stringent contractual provisions by urban planners and administrators.     

Location Determinants of New Foreign-Owned Manufacturing Plants

In this paper we examine the county-level pattern of new foreign-owned manufacturing plants in the United States from 1989 through 1994. We construct a model to produce insights into the differences in the location of these plants among Bureau of Economic Analysis regions, as well as between rural and urban counties. Higher levels of economic size, educational attainment, the existing manufacturing base, and transportation infrastructure are found to be associated with larger numbers of new foreign-owned plants. Meanwhile, higher levels of taxes and labor-intensiveness are found to be associated with smaller numbers of new plants. Comparing regions, we find that the main advantages of the Southeast region stem from a relatively high manufacturing base and relatively low taxes. Comparing urban with rural counties, we find that urban counties possess more favorable average values for nearly all the explanatory variables.     

Profitability or Industrial Relations: What Explains Manufacturing Performance across Indian States?

This article begins with a critique of the well-known claim by Besley and Burgess concerning the negative impact of labour regulation on organized sector manufacturing performance in India. In the second part of the article, the authors use a state-level panel data set for the period 1969–2005 to analyse the relative importance of profitability (rate of profit as a percentage of the total replacement cost of capital stock) and industrial disputes (man-days lost to all industrial disputes as a percentage of total workers employed) to explain cross-state variations of manufacturing performance in India's organized sector. Using three different measures of manufacturing performance — net value added, investment and employment — they find that profitability is more significant than industrial disputes in explaining the variation of manufacturing sector performance across Indian states. The findings presented here therefore question the uncritical acceptance of Besley and Burgess's results in the literature on labour regulation.     

Dynamic road pricing and the value of time and reliability

High Occupancy Toll (HOT) lanes that use dynamic pricing to manage congestion and generate revenue are increasingly popular. In this paper, we estimate the behavioral response of drivers to dynamic pricing in an HOT lane. The challenge in estimation lies in the simultaneity of price and demand: the structure of dynamic tolling ensures that prices increase as more drivers enter the HOT lane. Prior research has found that higher prices in HOT lanes increase usage. We find that after controlling for simultaneity HOT drivers instead respond to tolls in a manner consistent with economic theory. The average response to a 10 percent increase in the toll is a 1.6 percent reduction in usage. Drivers primarily value travel reliability over time savings, although there is heterogeneity in the relative values of time and reliability based on time of day and destination to or from work. The results highlight the importance of both controlling for simultaneity when estimating demand for dynamically priced toll roads and treating HOT lanes with dynamic prices as a differentiated product with bundled attributes.     

INFLATION, PROGRESSIVITY, AND STATE INCOME TAX REVENUES

The combination of progressive income tax structures and inflation has led to significant increases in state income tax revenues. While the federal government has de facto indexed the federal personal income tax, states have generated large relative and absolute increases in their income tax revenues. This paper shows that the ratio of income tax revenues to personal income has grown significantly more in states with progressive income tax structures than those with proportional tax structures. Almost half of such increases may be attributed to inflation. The increase in the relative share of income tax as a source of state revenues has recently run into resistance in some states which have installed income tax indexation measures. This may suggest that the marginal cost of raising revenue through inflation, relative to other means (taxes), is reaching its limits.     

Educational Outcomes and House Values: A Test of the value added Approach*

Abstract. We use house price hedonics to compare the extent that homeowners value traditional measures of school quality or the “value added” of schooling. Unlike other studies, we use spatial statistics as an identification strategy. Based on our study of 310 school districts and 77,000 house transactions, we find little support for the value added model. Instead, we find that households consistently value a district's average proficiency test scores and expenditures. The elasticity of house prices with respect to school expenditures is 0.49, and an increase in test scores by one standard deviation, ceteris paribus, raises house prices by 7.1 percent.     

Environmental policy instruments and their effects on innovation

The influence of environmental policy on innovative behaviour of companies has so far received little attention in scientific discourse. Based on recent literature, the paper analyzes the impact of requirements, levies, permits, liability laws, and the EC‐eco‐audit regulation with respect to the generation of environmentally benign innovations. Most theoretical studies come to the conclusion that direct requirements provide little incentives for dynamic effects and that emission taxes and permits are better instruments to promote innovations. However, the empirical studies show that the dynamic effects of environmental policy instruments in practice partly differ from the ideal instruments analyzed in theoretical studies.     

Distinguishing Development Incentives from Developer Give-Aways: A Critical Guide for Development Practitioners and Citizens

The vast majority of communities offer financial incentives to private businesses and, among these, tax incentives remain the most widely used. Tax and other financial subsidies used to attract firms account for the bulk of public resources spent on economic development. Yet the interests of city residents—especially those marginalized in city politics—generally are not a key consideration in the fashioning of incentives. Using a hypothetical abatement proposal, this article highlights nine key questions that must be addressed to understand the potential benefits to the community of tax incentive programs. This exercise demonstrates how proponents of incentive deals typically overvalue benefits. By asking the right questions and conducting their own analysis, citizens can arrive at a more realistic estimate of net benefits.     

THE LOCATIONAL DYNAMICS OF MANUFACTURING IN CHINA'S COUNTIES: INFLUENCE OF EXPRESSWAY INVESTMENT

This study investigates the impact of expressway investment in China's counties. By identifying expressway accessibility through toll station locations, we estimate the manufacturing distribution along expressways for 2001–2005. We find that expressway accessibility promotes manufacturing employment for inland counties by around 41 percent; however, for coastal counties that already have high road density and dense manufacturing layouts, the returns from new expressways are small. Furthermore, counties close to large cities benefit more from expressway accessibility than do counties that are far from them. The gap first increases in the period of expressway construction and then decreases as expressway effects are smoothed.     

THE IMPACT OF POLICIES TO CONTROL MOTOR VEHICLE EMISSIONS IN MUMBAI,INDIA*

ABSTRACT This paper examines the impacts of measures to reduce emissions from buses, cars, and two‐wheelers in Mumbai, India. We have considered three possible policies: conversion of diesel buses to CNG, an increase in the price of gasoline and a tax on vehicle ownership. Our results suggest that the most effective policy to reduce emissions from passenger vehicles—in terms of the total number of tons of PM10 reduced—is to convert diesel buses to CNG. The conversion of 3,391 diesel buses to CNG would result in an emissions reduction of 663 tons of PM10 per year, 14 percent of total emissions from transport.