In their classic textbook, Musgrave and Musgrave (1989)


 Dulcie Fletcher
 2 years ago
 Views:
Transcription
1 Integrating Expenditure and Tax Decisions Integrating Expenditure and Tax Decisions: Te Marginal Cost of Funds and te Marginal Benefit of Projects Abstract  Tis paper seeks to clarify te extent to wic te rule for providing public goods ougt to correct for te distortionary cost of raising funds We argue tat, in evaluating public projects, te marginal cost of funds (MCF) concept must be supplemented by a symmetrical concept, wic we label te marginal benefit of public projects, or MBP, wic indicates te value to individuals of te dollars spent Eac of tese concepts can be decomposed into two separate components, one reflecting efficiency and te oter caracterizing te distributional impact of te project itself or its financing We conclude tat efficiency of te financing cannot be ignored, tat distributional considerations are also relevant, and tat te availability and optimality of tax instruments is critical for evaluating te appropriateness of proceeding wit a public good cum financing project However, one can construct special cases, as in Kaplow (1996), were te simple cost benefit criterion applies Joel Slemrod University of Micigan, Ann Arbor, MI Slomo Yitzaki Department of Economics, Hebrew University, Jerusalem, 91905, Israel National Tax Journal Vol LIV, No 2 INTRODUCTION In teir classic textbook, Musgrave and Musgrave (1989) lament te disconnection between te expenditure and tax sides of public finance: Altoug good economic analysis calls for joint consideration of bot aspects, te practice is to deal wit tem separately (p 211) One notable exception to tis disconnection is te issue of to wat extent an analysis of public goods ougt to correct for te distortionary cost of raising te funds for te project Pigou (1947) discusses te subject, and te modern analytical treatment of te subject is well illustrated by Atkinson and Stern (1974), wo derive te tax modified Samuelson rule for public good provision and te marginal cost of funds encefort (MCF) Muc recent work as extended tis analysis, but apparent contradictions remain For example, Kaplow (1996) argues tat te decision about weter to provide a public good sould be made witout taking into account te marginal welfare cost of taxation and tat it is optimal to supply te public good wen te simple cost benefit test is satisfied Tis surprising result apparently contradicts Atkinson and Stern (1974) as well as a long line of literature using distributional weigts in evaluating public goods (eg, Harberger, 1978, 1980; Squire, 1980; Brent, 1984) 189
2 Te aim of tis paper is to generalize tis literature and, in so doing, clarify te recent contributions Te generalization includes allowing for evasion, avoidance, and administrative costs of taxation We maintain tat te concept of MCF sould continue to serve as te basic rule for evaluating te revenue side However, in evaluating public projects, te MCF concept sould be supplemented by a symmetrical concept, wic we will refer to as te Marginal Benefit from Public projects, ereafter MBP, wic indicates te value to te individuals in te community of a dollar spent on a public project Te calculations of cost benefit analysis sould compare te MBP to MCF, wit a recommendation to accept te project if te MBP is greater tan te MCF We also argue tat, in general, distributional considerations sould not be ignored To directly deal wit distributional considerations, te MCF concept is decomposed into two separate components: Marginal Efficiency Costs of public Funds (Maysar and Yitzaki, 1995, MECF ereafter) and Feldstein s (1972) Distributional Caracteristic of te tax base (DC) Similarly, for eac parameter affecting te spending on a public project, te MBP can be decomposed into a marginal efficiency benefit of funds (MEBP) and a distributional caracteristic of te public good (also DC) Te MEBP indicates te (equivalent of) monetary value (ie, te willingness to pay) to te individuals of spending an additional dollar by te government, and te DC evaluates its effect on social welfare Finally, we stress te critical importance of te assumptions made about te availability of tax instruments, and weter te tax structure is assumed to be optimal Te paper proceeds as follows We first discuss te MCF, DC, and MECF concepts for a cange in one indirect tax, and address te MBP and MEBP concepts; next, we extend te analysis to any parameter 190 NATIONAL TAX JOURNAL in te tax law To illustrate te metodology, te paper ten applies te analytical framework to te structure of a linear income tax We ten discuss optimal public good provision in te presence of a non optimal tax system Finally, we comment on recent contributions to tis literature, in particular Kaplow (1996), in te ligt of te framework presented ere, and offer some concluding comments THE MCF AND MECF CONCEPTS We first address te problem in a setting in wic avoidance, evasion and administrative costs do not exist, and were te only tax instruments are commodity taxes It is assumed tat te government evaluates its actions wit reference to a social welfare function of te following form: [1] W(V 1 (G 1,G 2,,G J,q 1,q n,y 1 ),,V H (G 1,,G J,q 1,q n,y H )), were G j is a pure public good ( j = 1,,J), q i (i = 1,,n) is te price of a private good tat te consumer faces, and y is te given lump sum income of individual ( = 1,,H) It is assumed tat te vector of producer prices (including wages), p, is given and tat t i = q i p i are te commodity tax rates (A non linear income tax will be introduced at a later stage) Government actions are constrained by te budget constraint [2]: Σ J Σ n j=1 [2] R 0 = G R = P j G j t i X i, i=1 were G is total expenditures in te budget and R is total revenue Te per unit price of producing G j is P j We use X i = Σ x i to denote te aggregate quantity (or expenditures in te case of ad valorem taxes) of commodity i, and x i is te quantity of te private good i consumed by individual
3 Integrating Expenditure and Tax Decisions In wat follows we do not assume tat te government is at all times maximizing te social welfare function Instead, we presume only tat tere exists a particular tax system tat satisfies te budget constraint, and tat te government is considering increasing tax revenue by $1 in order to finance an increase in te supply of a public good Te issue at and is weter te government, wic is interested in increasing social welfare, sould proceed We first consider weter it is social welfare increasing to increase te production of G j by one dollar and to finance it troug an increase in t i To evaluate weter tis package of expanded public goods wit a specified financing sceme is wort proceeding wit, one as to compare te increase in social welfare from increasing te supply of te public good to te reduction in te social welfare due to te increase in taxes Equation [3] presents te comparison: [3] Σ H =1 W V V G j (?<)0 dg j (P j R)dG G j j Σ H =1 W V R ti V t i dt i dt i Equation [3] is derived from rearranging te derivatives of te social welfare function [1] and te revenue constraint [2] wit respect to bot G j and t i Te numerators in bot terms of [3] are, respectively, te direct effect of increasing G j and te direct effect of increasing t i, on social welfare Te denominators represent te impact of increasing G j and te impact of increasing t i on te budget constraint of te government, respectively Since te budget constraint is given, te denominators are equal to eac oter Te first term on + te left and side is te increase in social welfare per (net) dollar spent by te government on G j Te second term represents te decrease in social welfare per dollar increase in revenue collected troug an increase in t i Terefore, te project increases social welfare, and is wort pursuing if [3] is positive In oter words, te first term of equation [3] evaluates, on te margin, te benefit to te society of increasing te production of te public good per dollar of net expenditure by te government Te second term evaluates te cost to te society, at te margin, of increasing te tax rate on commodity i suc tat te net revenue received by te government increases by one dollar Tis project sould proceed if te first term, wic we will refer to as te Marginal Benefit from Public Goods (MBP), is greater tan te cost to te society of raising te funds necessary to finance te project, ereafter te Marginal Cost of Funds, or MCF We next consider more closely te MCF, a concept tat as been discussed extensively in te literature 1 Wit producer prices given, and denoting te social evaluation of te marginal utility of income as β = ( W/ V ) ( V / y ), ten using Roy s identity one can rewrite te rigt and side of equation [3] as: X i Σ [4] MCF i = MR β s i i were s i = x i /X i is te sare of individual in te consumption of commodity i and MR i is te marginal revenue wit respect to t i Formally, we can write: n [5] MR i = R X X i + t k t i Σ k k=1 t i 1 Te derivation of te MCF, and te MECF discussed later, is based on Slemrod and Yitzaki (1996), wo rely on Maysar (1990), Wildasin (1984), and Maysar and Yitzaki (1995) 191
4 NATIONAL TAX JOURNAL Te rigt and side of [4] can be decomposed into two terms Te first term is defined as: [6] DC i = Σ β s i, wic is Feldstein s (1972) Distributional Caracteristic of a commodity, and is a weigted average of te social evaluation of te marginal utility of income, weigted by te sare of eac individual in te burden of raising te tax revenue It describes te incidence of a dollar burden of taxes, raised troug te cange in t i Te iger is DC i, te less progressive is te cange in te tax on commodity i Te second term on te rigt and side is caracterized in Maysar and Yitzaki (1995) as te Marginal Efficiency Costs of Funds, or MECF, were: [7] MECF i = An extended interpretation of te MECF is given in Slemrod and Yitzaki (1996) Briefly, te MECF measures te ratio of te cost to taxpayers of funds raised to te value of te funds received by te government, ignoring distributional issues Te difference in value between te numerator and denominator is caused by leakages (as in Okun s (1975) leaky bucket ) from te tax base caused by taxpayers tat are maximizing utility in te presence of taxation Te direct burden on taxpayers of increasing t i is X i At te oter end of te transfer, te government receives only MR i, and te MECF i is te ratio of te burden on te individuals to te dollar amount collected by te government If t i is a lump sum levy, and all oter tax rates are equal to zero, ten te MECF equals one But in general, as pointed out X i X i MR = i X Xi + Σ n t k k k=1 t i in Maysar (1990), wen te starting point is an arbitrary tax system, ten te MECF of a lumpsum levy can be lower or iger tan one 2 As discussed in Slemrod and Yitzaki (1996), one needs only to be able to forecast te revenue generated from a cange in eac tax rate to calculate te MECF Combining equations [4], [5] and [6] we ave sown tat te rigt and side of [3] can be restated as [8] MCF i = DC i MECF i Te first term reflects te distributional impact of raising funds via an increase in t i, wile te second reflects te efficiency costs of raising te funds Altoug a value of one for te MECF as a natural interpretation, tis is not true for te MCF unless β is someow normalized For example, Atkinson and Stiglitz (1980) normalize by setting te unweigted mean value of β to one Anoter possibility is to set sup (β ) to one, wic implies tat 1 β > 0, wit β being one for te poorest person Te type of normalization used affects te value of te MCF, but does not affect te decision of weter to approve a public project Slemrod and Yitzaki (1996) define te MECF in a more complicated setting tat includes avoidance activity, evasion and administrative costs Tis same setting can be repeated ere However, instead of redeveloping it ere we will only explain te logic and te interested reader is referred to te above mentioned paper In te more general setting, te numerator of equation [7] is te additional tax tat would ave been collected if tere were no beavioral response on bealf of te taxpayer Tis tax represents te additional burden on te taxpayer imposed by te canges in te parameters in te tax system Te denominator is te additional tax collected by te government, taking 2 A negative value of te MECF indicates tat te tax system is on te declining portion of te Laffer curve 192
5 Integrating Expenditure and Tax Decisions into account te beavioral response Te ratio of te two is te additional burden per additional dollar collected Te ratio of te tax tat would ave been collected to te actual additional tax collected is te MECF To derive tis interpretation, note tat te difference between te numerator and te denominator is te result of te substitution effect Assuming tat te taxpayer is at an interior solution and tat te cange in te tax rate is small, it is easy to see tat, on te margin, a taxpayer will be ready to sacrifice a dollar value of utility to save a dollar of taxes Hence, te numerator represents te burden on te taxpayer (wic is composed of additional tax collected plus taxes avoided by substitution) wile te denominator represents additional tax collected Extending tis logic to include evasion and avoidance opportunities as well as administrative costs leads to te following expression: γ (X [7 ] MECF i = i MR i ) + C i + MR i, MR i A i were γ is te social evaluation of te dollars tat te taxpayer is sacrificing at te margin in order to save a dollar of tax, 3 C i is te marginal compliance cost associated wit te cange in te it instrument, A i is te marginal administrative costs, and MR i A i is te net revenue collected at te margin Te intuitive interpretation of te expression is te same as before, wit some qualifications Te potential tax is X i, (X i MR i ) is leaked at a social cost of γ per dollar, MR i is collected by te government, and C i is te additional involuntary compliance cost Hence, te total burden on society is te sum of tose (X and C) components Of te MR i collected by te government, A i is spent on administration, leaving MR i A i in te coffers MECF is te burden on society divided by wat is collected net of te cost of doing business Tis yields te marginal efficiency cost of a dollar collected Te extension of te analysis into canging several tax rates is also straigtforward Te MECF of a cange in several tax rates is te weigted average of te MECF of individual tax rates weigted by teir sare in te revenue raised 4 THE MBP AND MEBP CONCEPTS We turn next to te first term on te left and side of [3], wic pertains to te value to te society of a (net) dollar spent by te government on a public good We sow tat a decomposition similar to te one applied earlier to te MCF is useful in interpreting te decision to invest in a public good Let b j = V / Gj V be te willingness to pay of individual for public y good G j, expressed in terms of lump sum income 5 Following te same procedure used for te derivation of te MCF, we can rewrite te left and side of equation [3] as: [9] MBP j = DC j MEBP j, were [10] MEBP j = B j /(P j Σ i t i ( X i / G j )) In expression [9], DC j = Σ β s, j s = j b / j B j, and B j =Σ b In words, B is te aggregate benefits (willingness to pay) to te j j society from increasing te public good G j by one dollar, and s is te sare of individual in te aggregate benefits Te j MEBP is te ratio of te (equivalent of) monetary benefits to te individuals to te 3 Te value of a dollar saved can be less tan a dollar if te taxpayer is at a corner solution As an example of being in a corner solution, consider te case of a taxpayer wo evades all is income 4 For a derivation of tis result, see Slemrod and Yitzaki (1996) 5 If free disposal exists, ten te relevant willingness to pay is Max [0, b j ] If free disposal is not allowed ten b j may be negative, and it will represent te willingness to pay to get rid of G j 193
6 NATIONAL TAX JOURNAL dollars spent by te government Te distributional caracteristic DC j describes te distribution of te benefits among te population For a given sum of willingness to pay, te larger te effect on tose wit iger social marginal utility of income, te iger te DC of te public good Tis is because te iger te marginal utility of te individual, te iger will be te distributional caracteristic parameter for a given sum of b Note tat j te MEBP is formally similar to te MECF, because bot refer to te ratio of direct costs or benefits to individuals to te (net) cost to te government If te public good as no effect on tax revenue, ten MBP j = DC j (B j ) Tis implies tat te MEBP of a public good depends bot on its revenue effect and on te intrinsic value of te public good, and suggests tat te MEBP j can be furter decomposed as: [11] MEBP j = (B j )(1/(1 Σ i (t i ) ( X i / G j )) (B j )MRCP j Te (B j ) term measures te ratio between te value to te individuals of te public good and te cost to te government Te MRCP j (te Marginal Revenue Cost of Public projects) term measures te cost (or benefit) of a public good due to its effect on tax revenues Using te decompositions of MCF and MBP, we can now rewrite [3] as follows, implying tat a public project is wort doing if: [3 ] DC j (B j ) (MRCP j ) > DC i MECF i It is instructive to note te formal similarity between te MBP and te MCF, te only difference being tat in te former te willingness to pay substitutes for te quantity consumed Imposing a tax (subsidy) is similar to reducing (increasing) te production of a public good: in bot cases te government affects all individuals troug a cange in a price or in a quantity Te cange in te public good canges te welfare of te individuals by teir willingness to pay, witout affecting te prices te individuals face, wile te cange in te tax affects te prices Roy s identity, wic connects te willingness to pay wit te marginal utility of income, is responsible for te similarity 6 Te extension of te analysis to canging te provision of several public goods simultaneously is similar to te extension on te tax side to multiple tax instruments OTHER TAX INSTRUMENTS So far we ave considered a tax system wic as only commodity taxes as tax instruments However, it is important to note tat te analytical structure involving te MCF and MBP is quite general, and can be applied to any parameter tat affects te tax system It can be extended, for example, to parameters of te tax enforcement system, suc as te fraction of tax returns tat are audited It can address a uniform lump sum tax or a differential lump sum tax It can deal wit complicated tax structures suc as tose tat caracterize te income tax, including suc features as allowances, exemptions, and income brackets Eac parameter is 6 Note tat, because te social welfare function affects only te distributional caracteristic, te MECF and te MEBP are still useful for a government wit an objective oter tan maximizing social welfare For example, if te government is a maximizer of votes (Hettic and Winer, 1997,1999, c 6), so tat te target function is P(U 1 (),U H ()) is te probability of voting for te government as a function of te utility level of te individuals, ten all we ave to do to adapt our concepts is to substitute voting caracteristic for distributional caracteristic wic will be a weigted average of te government evaluation of te cange in probability to vote for te government of te t individual weigted by te burden imposed on im Tat is, instead of β = ( W/ V ) ( V / y), one can use β * = ( P/ U ) ( U / y) in te definition of te DC of te commodity 194
7 Integrating Expenditure and Tax Decisions treated in a similar way as any commodity tax in te earlier model To see te generality of te approac, consider any tax instrument, z In order to evaluate its MCF, one as to know its direct impact on social welfare, plus its impact on tax revenue Te MCF is simply te ratio of te former to te latter In expression [4] and tereafter, X refers no longer to te amount of good X consumed, but rater to te tax base to wic instrument z applies It reveals te amount of revenue tat would be collected from a cange in z, absent any beavioral response Te effect on te social welfare function can be furter decomposed into te distributional caracteristic and te Marginal Efficiency Cost of Funds components Tis procedure is relevant to every parameter z, be it a marginal tax rate, an income bracket or any oter parameter For example, it can be sown tat in te context of an income tax, expression [7] reduces to 1/(1 e), were e (defined to be a positive number) is te elasticity of taxable income Tis concept is discussed in Feldstein (1997) and Slemrod (1998) Te introduction of a general non linear income tax can be interpreted in te case of a continuous distribution of endowments as introducing an infinite number of tax parameters, or, in te case of a discrete distribution of endowments, as introducing a number of parameters at least as large as te number of individuals, wit eac marginal tax rate being a separate tax parameter Te DC of eac marginal tax rate is calculated as if it was a lump sum tax on all incomes iger tan te income on wic te marginal tax rate is effective Te MECF is determined by te cange in tax revenue of all taxpayers wit income equal to or iger tan te one on wic te marginal tax rate is imposed A final, important, example arises if te government is able to carge eac individual according to is willingness to pay 195 for te public good In tis case, DC j = DC i In tis case one can ignore distributional issues because te project (and its financing) is distributionally neutral If, in addition, MECF equals one, ten according to [3 ], te project sould be done as long as MEPB j exceeds one Tis corresponds to Lindal s solution to te public good provision problem We return to tis example later in our discussion of Kaplow (1996) Before moving on, we pause ere to make an important observation At te margin, weter or not to proceed wit a given public good project depends on te financing sceme tat accompanies it It may be sensible to proceed wit a given project under one financing sceme, but not wit anoter OPTIMAL TAX SYSTEMS AND OPTIMAL PUBLIC GOOD PROVISION To tis point we ave not assumed tat, wen considering weter to undertake a public good cum financing package, te existing tax system is in any sense optimal We now turn to consider ow tis would cange our analysis An optimal tax system is tat structure wic maximizes [1], subject to [2], over te set of available tax instruments, olding te vector of public goods fixed For some instruments, suc as commodity taxes, tere is no constraint on te value of te tax rate: a negative tax is simply a subsidy In oter cases, suc as te amount of resources devoted to auditing, a negative setting is not feasible, so tere is a non negativity constraint It is straigtforward to sow tat in te optimal tax structure all tax instruments tat are utilized ave an equal value of MCF i = DC i MECF i To illustrate te implications of tis, we consider te problem analyzed by Wilson (1991) and Sandmo (1998), in wic te government as only two tax instruments: a uniform lump sum tax (or demogrant), and a
8 NATIONAL TAX JOURNAL single marginal income tax Assume tat te linear income tax can be caracterized as: [12] T = a + t w L, wit w being te wage rate and L is ours worked Assume tat tere is a zero revenue requirement Ten, te linear tax may ave two possible structures: (a > 0 and t < 0) were te tax is composed of a lump sum tax and a subsidy for labor income, or (a < 0 and t > 0), tat is, a lump sum subsidy and a positive tax rate We will consider only te second structure because, as sown later, te first can never be optimal Let DC a be te distributional caracteristic of te lump sum tax 7 Ten: [13] DC a = (1/H)Σ β and [14] DC t = Σ s β, were s =(w L ) / (Σ w L ) is te sare of individual in labor income and (1/H) is effectively te sare of eac individual in an equal per capita ead tax Te MECFs are: 1 [15] MECF a =, 1 + t Σ n L w a and [16] MECF t = We first sow tat, provided tat te social evaluation of te marginal utility of income declines wit labor income, ten: =1 Σw L L Σ w L + t Σ t [17] DC a DC t = Σ β (1/H s ) > 0 To see tat expression [17] is positive, arrange te population in declining order of β (By assumption, tis will also be in increasing order of labor income) Since s increases wit, it must be tat te term in brackets decreases wit Since, by definition, Σ (1/H s ) is zero, it must be tat te term in te brackets is positive for small, and negative for large Since β is positive and declines wit, it follows tat DC a DC t > 0, and so DC a > DC t If tese two instruments are used optimally, ten DC a MECF a = DC t MECF t, so tat MECF t > MECF a If, on average, leisure is a normal good (ie, Σ w ( L / a) > 0), ten MECF a 1; tus, MECF a differs from one (only) because of income effects Note tat, wen te tax system is optimal, te coice of weter at te margin to proceed wit a public good project does not depend on any assumed financing sceme, because witin te set of feasible taxes all scemes ave te same MCF 8 In tis case one can speak of te marginal cost of funds tat can be used as a bencmark for any prospective public good project Altoug different alternative financing scemes will in general ave different values of MECF, eac tax instrument used will ave an offsetting value of te DC Te less efficient instruments used, ie, tose wit a ig value of te MECF, will necessarily also ave a low value of te DC tey will raise revenue from individuals wit relatively low social marginal valuations 9 Mirrlees (1971) optimal non linear income tax problem is anoter example of optimization As mentioned above, one can view Mirrlees income tax problem as aving an infinite number of instruments 7 Note tat DC a and MECF a refer to te distributional caracteristic and cost of funds of raising revenue via increasing a 8 Tis is in sarp contrast to te rule tat applies wen te tax system is not optimal, wen project approval sould depend on wat financing package accompanies te project 9 Condition [17] can be used to sow tat te case (a > 0, t < 0) cannot be optimal 196
9 Integrating Expenditure and Tax Decisions If te income tax is set to be optimal, ten te MCF of eac of te infinite number of tax parameters must be equal Te solution to tis problem is complicated, inter alia, because of te simultaneous impact of tose marginal tax rates on te MECF of eac oter In parallel to considering an optimal tax system, one can consider te case in wic te set of public goods is optimized, for a given amount of funds tat may or may not ave been raised optimally If no projects are lumpy, ten it is straigtforward to sow tat at te optimum all projects undertaken will ave te same value of MBP = DC(B/P)(MRCP) Tose projects tat fail to meet tis common value are not undertaken Altoug tere is one common value of te MBP, any marginal project is more likely to be accepted te better is te financing package tat accompanies it, were better means a lower value of te MCF If te set and quantity of bot public goods and tax instruments can be cosen optimally, ten all tax instruments used will ave te same value of MCF = DC MECF, and all te public goods provided will ave te same value of MBP = DC(B/P)MRCP Furtermore, te common value of te MCF will equal te common value of te MBP OPTIMAL PUBLIC GOOD PROVISION IN THE PRESENCE OF A NON OPTIMAL TAX SYSTEM Assuming tat taxes are set optimally is convenient, because it allows us to assume tat te MCFs are equal It is, toug, implausible tat tese conditions are met in practice On te oter and, wen te starting point is non optimal, eac tax parameter in te system may be associated wit a different MCF Tis implies tat associating a project wit one set of taxes may suggest tat it be rejected, wile associating it wit anoter set of taxes may suggest tat it be accepted In 197 tis situation understanding wy te existing tax system is not optimal becomes important In wat follows we consider tree types of explanations: (a) Tere as been a cange in te parameters of te problem since te last time te tax/public expenditure system was reformed, (b) Tere are oter (eg, political) constraints tat ave not been addressed in te model, and (c) Tere exist non convexities or discontinuities in te administrative cost function If a cange in parameters is te culprit, te first best response is to reform te tax system in order to return it to an optimal setting A relatively low MCF does not justify accepting a project, nor does a relatively ig MCF justify not accepting it If te culprit is outside te model constraints, te MCFs redefined to include te sadow prices for tese constraints would again all be equal Because te sadow prices may affect different MCFs differently, te MCFs calculated ignoring tese extra model constraints may differ For example, assume tat te MCF of eliminating te mortgage interest deduction is relatively low, but te (unmeasured) political cost of eliminating it is substantial Ten, applying te MCF of tis impossible to implement tax instrument could justify many projects tat could not be justified if coupled wit oter, feasible, tax instruments How sould a policy maker proceed in tis case? Assuming tat it is certainly feasible to raise additional taxes by proportionally raising all existing tax rates, one can use an average of tese MCFs, weigted by teir marginal tax revenue, as a rule of tumb for te MCF for project evaluation Finally, consider te point empasized in Slemrod and Yitzaki (1996), tat administrative costs tend to be discontinuous and non convex For example, introducing a value added tax will entail a large fixed cost, as a process of reporting and monitoring te tax base of eac firm must be establised Having tis infra
10 NATIONAL TAX JOURNAL structure in place lowers te MECF of furter VAT revenue and may also affect te MECF of oter tax instruments, eg, by providing information tat is relevant for income tax enforcement Altoug te marginal cost of raising te first dollar from a VAT may appear proibitively ig, te marginal cost of raising funds from an existing VAT may be quite low Now consider a country tat does not currently ave a VAT, but for wic at a sligtly iger level of revenue requirement it would make sense to adopt a VAT to raise a substantial fraction of its revenues For deciding weter to proceed wit a public project funded by VAT, it is not appropriate to use te literal marginal cost of raising funds, but instead one sould consider te cost of non discrete canges in te tax system Tese tree explanations for unequal MCFs ave different policy implications To see tis, let us ignore distributional issues and assume a representative consumer economy, so tat we can state te issue in terms of te MECF instead of te MCF Consider te example were te MECF of a specific funding alternative is less tan one Tis implies tat a public project may be adopted even if te marginal benefit of te project is equal to or lower tan one or, loosely speaking, its return is negative; tis is because a ceap way of raising public funds as been identified Under a reformed, optimal, tax system te MECF of tis and any oter funding metod must be greater tan one 10 Tus, te rigt solution is to reform te system and not to adopt te MEBP< = 1 project If, on te oter and, tere are adminstrative cost non convexities, ten it may be appropriate to adopt tis project because te tax system is in a neigborood of a (locally) low marginal cost of raising funds Finally, if tere are un modeled constraints, ten a weigted average MECF of certainly feasible tax instruments may be an appropriate bencmark for evaluating projects RELATIONSHIP TO RECENT LITERATURE Sandmo (1998) addresses similar issues, and reaces conclusions wic are compatible wit tose stated ere However, our approac is more general tan Sandmo s on a number of dimensions First, we allow a general social welfare function, wile Sandmo treats only a utilitarian social objective function Second, our metodology allows for a wider range of beavioral response, including for example avoidance and evasion, and a wider set of instruments Finally, we stress te parallel nature of te optimal taxation and optimal public good provision problems Sandmo, on te oter and, does not restrict te analysis to te margin Ng (2000, p 259) informally makes a similar point to ours in is reconciliation of Feldstein (1997) and Kaplow (1996) He argues tat one must consider te incentive effects of bot te public spending and te accompanying tax, and te net distributional effect of te package He does not, owever, develop an analytical framework for assessing weter to undertake a package of public spending and funding Our analysis is completely consistent wit te tone of Kaplow (1996), but it is inconsistent wit its central conclusion Te tone of Kaplow s paper is well captured by te following statement: Knowledge tat te aggregate reform te public good and te tax adjustment, taken togeter causes distortion tus provides little guidance, because te existence of 10 Tis will obtain in te absence of te kind of nonconvexities discussed above As demonstrated in Yitzaki (1979), in tis case te MECF must always be above one 198
11 Integrating Expenditure and Tax Decisions distortion is associated wit greater redistribution (p 520) Tis is completely consistent wit te analysis presented ere In terms of expression [3 ], knowing te terms tat ave to do wit revenue leakage and terefore efficiency, MECF and MRCP, is not sufficient for deciding weter to proceed wit a public good; DC j and DC i, te distributional caracteristics of te public good and te assumed financing, also enter into te decision It does not follow, toug, tat for any given financing mecanism, expression [3 ] reduces to (B j ) > 1, wic is wat is implied by Kaplow s statement tat it is optimal to supply te public good wen te simple cost benefit test is satisfied Yes, in general tere is a tendency for more progressive tax scemes (tose wit a low value of DC i ) to be more distorting (ave a ig value of MECF i ), and similarly for public goods But, outside of an optimum, tere is no necessary link between te distrbutional caracteristic of a tax or public good and te revenue leakage associated wit it Indeed, one can easily imagine tax scemes wic are bot regressive and inefficient, suc as an easily evaded tax on a commodity consumed disproportionately by te poor Moreover, one can imagine two tax scemes tat ave identical distributional caracteristics but are not equally efficient It migt certainly be appropriate to reject a public good wit a value of (B j ) tat exceeds one tat ad to be financed by an inefficient tax, but to accept it if it is financed by an efficient tax If one is willing to assume tat te initial tax system and te financing package are optimal, ten it is correct tat te MECF is irrelevant In tis case at te optimum DC MECF is equal for all financing scemes, so te more distorting instruments are necessarily tose tat cause a more progressive distribution of te burden Tax instruments, suc as tose in te example above, wic are relatively distorting and not progressive, will not be part of te optimal tax structure CONCLUSION In determining weter particular new public projects or canges in te tax system are appropriate, neiter te distributional impact of te proposals nor te beavioral response to tem sould be ignored Tis implies tat te primitives of te problem, te concavity of te social welfare function, and te magnitude of te beavioral response all affect te evaluation of proposals for financing new public goods Tere may, toug, be special cases were simpler rules may apply For example, if te distributional caracteristic of te public good is identical to te distributional caracteristic of te tax instrument ten one can use te simple cost benefit rule Our analysis as focused on marginal increases in public spending Altoug marginal evaluations ave te advantage of reducing information requirements, one migt question te applicability of marginal approximations to discrete projects In tis paper, te reliance on marginal derivation is necessary to allow for te evaluation of tree issues: te willingness to pay, te burden of te cange in te tax, and te distributional caracteristics of te tax and te public project Our approac is appropriate wenever a first order approximation does not introduce a large error into te evaluation of te appropriate term Willig (1976) provides some rules of tumbs for te first two approximations to be reasonable Te tird one, concerning te distributional caracteristic of te project, requires tat te social evaluation of te marginal utility of income is not significantly affected by te project Furter researc, along te lines suggested by Willig, migt clarify under wat conditions tis is an appropriate approximation for discrete projects 199
12 NATIONAL TAX JOURNAL Acknowledgments We would like to tank Louis Kaplow, Stanley Winer, te Editor, and two anonymous referees for perceptive comments on earlier drafts REFERENCES Atkinson, Antony, and Nicolas Stern Pigou, Taxation, and Public Goods Review of Economic Studies 4 No 1 (January, 1974): Atkinson, Antony B, and Josep E Stiglitz Lectures on Public Economics New York: McGraw Hill Book Co, 1980 Brent, R J Use of Distributional Weigts in Cost Benefit Analysis: A Survey of Scools Public Finance Quarterly 12 No 2 (April, 1984): Feldstein, Martin S Distributional Equity and te Optimal Structure of Public Prices American Economic Review 62 No 1 (Marc, 1972): 32 6 Feldstein, Martin S How Big Sould Government Be? National Tax Journal 50 No 2 (June, 1997): Harberger, Arnold C On te Use of Distributional Weigts in Social Cost Benefit Analysis Journal of Political Economy 86 No 2 (April, 1978): S87 S120 Harberger, Arnold C Reply to Layard and Squire Journal of Political Economy 88 No 5 (October, 1980): Hettic, Walter, and Stanley L Winer Te Political Economy of Taxation In Perspectives on Public Coice, edited by Dennis C Mueller, Cambridge: Cambridge University Press, 1997 Hettic, Walter, and Stanley L Winer Democratic Coice and Taxation New York: Cambridge University Press, 1999 Kaplow, Louis Te Optimal Supply of Public Goods and te Distortionary Cost of Taxation National Tax Journal 48 No 4 (December, 1996): Maysar, Joram On Measures of Excess Burden and teir Applications Journal of Public Economics 43 No 3 (December, 1990): Maysar, Joram, and Slomo Yitzaki Dalton Improving Tax Reform American Economic Review 85 No 4 (September, 1995): Mirrlees, James An Exploration in te Teory of Optimum Income Taxation Review of Economic Studies 38 No 2 (April, 1971): Musgrave, Ricard A, and Peggy B Musgrave Public Finance in Teory and Practice 5 t ed New York: McGraw Hill Book Company, 1989 Ng, Yew Kwang Te Optimal Size of Public Spending and te Distortionary Cost of Taxation National Tax Journal 53 No 2 (June, 2000): Okun, Artur M Equity and Efficiency: Te Big Trade off Wasington, DC: Brookings Institution, 1975 Pigou, A C A Study in Public Finance London: MacMillan, 1947 Sandmo, Agnar Redistribution and te Marginal Cost of Public Funds Journal of Public Economics 70 No 3 (December, 1998): Slemrod, Joel Metodological Issues in Measuring and Interpreting Taxable Income Elasticities National Tax Journal 49 No 4 (December, 1998): Slemrod, Joel, and Slomo Yitzaki Te Social Cost of Taxation and te Marginal Cost of Funds International Monetary Fund Staff Papers 43 No 1 (Marc, 1996): Squire, Lyn On te Use of Distributional Weigts in Social Cost Benefit Analysis Journal of Political Economy 88 No 5 (October, 1980): Wildasin, David E On Public Good Provision wit Distortionary Taxation Economic Inquiry 22 No 2 (April, 1984):
13 Integrating Expenditure and Tax Decisions Willig, Robert D Consumer s Surplus Witout Apology American Economic Review 66 No 4 (September, 1976): Wilson, Jon D Optimal Public Good Provision wit Limited Lump Sum Taxation American Economic Review 81 No 1 (Marc, 1991): Yitzaki, Slomo A Note on Optimum Taxation and Administrative Costs American Economic Review 69 No 3 (June, 1979):
14
Can a LumpSum Transfer Make Everyone Enjoy the Gains. from Free Trade?
Can a LumpSum Transfer Make Everyone Enjoy te Gains from Free Trade? Yasukazu Icino Department of Economics, Konan University June 30, 2010 Abstract I examine lumpsum transfer rules to redistribute te
More informationGeometric Stratification of Accounting Data
Stratification of Accounting Data Patricia Gunning * Jane Mary Horgan ** William Yancey *** Abstract: We suggest a new procedure for defining te boundaries of te strata in igly skewed populations, usual
More information2.28 EDGE Program. Introduction
Introduction Te Economic Diversification and Growt Enterprises Act became effective on 1 January 1995. Te creation of tis Act was to encourage new businesses to start or expand in Newfoundland and Labrador.
More informationInstantaneous Rate of Change:
Instantaneous Rate of Cange: Last section we discovered tat te average rate of cange in F(x) can also be interpreted as te slope of a scant line. Te average rate of cange involves te cange in F(x) over
More informationUnemployment insurance/severance payments and informality in developing countries
Unemployment insurance/severance payments and informality in developing countries David Bardey y and Fernando Jaramillo z First version: September 2011. Tis version: November 2011. Abstract We analyze
More information2.12 Student Transportation. Introduction
Introduction Figure 1 At 31 Marc 2003, tere were approximately 84,000 students enrolled in scools in te Province of Newfoundland and Labrador, of wic an estimated 57,000 were transported by scool buses.
More informationMath 113 HW #5 Solutions
Mat 3 HW #5 Solutions. Exercise.5.6. Suppose f is continuous on [, 5] and te only solutions of te equation f(x) = 6 are x = and x =. If f() = 8, explain wy f(3) > 6. Answer: Suppose we ad tat f(3) 6. Ten
More informationThe EOQ Inventory Formula
Te EOQ Inventory Formula James M. Cargal Matematics Department Troy University Montgomery Campus A basic problem for businesses and manufacturers is, wen ordering supplies, to determine wat quantity of
More informationDerivatives Math 120 Calculus I D Joyce, Fall 2013
Derivatives Mat 20 Calculus I D Joyce, Fall 203 Since we ave a good understanding of its, we can develop derivatives very quickly. Recall tat we defined te derivative f x of a function f at x to be te
More informationM(0) = 1 M(1) = 2 M(h) = M(h 1) + M(h 2) + 1 (h > 1)
Insertion and Deletion in VL Trees Submitted in Partial Fulfillment of te Requirements for Dr. Eric Kaltofen s 66621: nalysis of lgoritms by Robert McCloskey December 14, 1984 1 ackground ccording to Knut
More information7.6 Complex Fractions
Section 7.6 Comple Fractions 695 7.6 Comple Fractions In tis section we learn ow to simplify wat are called comple fractions, an eample of wic follows. 2 + 3 Note tat bot te numerator and denominator are
More information2.23 Gambling Rehabilitation Services. Introduction
2.23 Gambling Reabilitation Services Introduction Figure 1 Since 1995 provincial revenues from gambling activities ave increased over 56% from $69.2 million in 1995 to $108 million in 2004. Te majority
More informationTangent Lines and Rates of Change
Tangent Lines and Rates of Cange 922005 Given a function y = f(x), ow do you find te slope of te tangent line to te grap at te point P(a, f(a))? (I m tinking of te tangent line as a line tat just skims
More informationCatalogue no. 12001XIE. Survey Methodology. December 2004
Catalogue no. 1001XIE Survey Metodology December 004 How to obtain more information Specific inquiries about tis product and related statistics or services sould be directed to: Business Survey Metods
More informationAn inquiry into the multiplier process in ISLM model
An inquiry into te multiplier process in ISLM model Autor: Li ziran Address: Li ziran, Room 409, Building 38#, Peing University, Beijing 00.87,PRC. Pone: (86) 0062763074 Internet Address: jefferson@water.pu.edu.cn
More information2.13 Solid Waste Management. Introduction. Scope and Objectives. Conclusions
Introduction Te planning and delivery of waste management in Newfoundland and Labrador is te direct responsibility of municipalities and communities. Te Province olds overall responsibility for te development
More informationThe differential amplifier
DiffAmp.doc 1 Te differential amplifier Te emitter coupled differential amplifier output is V o = A d V d + A c V C Were V d = V 1 V 2 and V C = (V 1 + V 2 ) / 2 In te ideal differential amplifier A c
More informationFinite Volume Discretization of the Heat Equation
Lecture Notes 3 Finite Volume Discretization of te Heat Equation We consider finite volume discretizations of te onedimensional variable coefficient eat equation, wit Neumann boundary conditions u t x
More informationTHE ROLE OF LABOUR DEMAND ELASTICITIES IN TAX INCIDENCE ANALYSIS WITH HETEROGENEOUS LABOUR
THE ROLE OF LABOUR DEMAND ELASTICITIES IN TAX INCIDENCE ANALYSIS WITH HETEROGENEOUS LABOUR Kesab Battarai 1,a and 1, a,b,c Jon Walley a Department of Economics, University of Warwick, Coventry, CV4 7AL,
More informationTheoretical calculation of the heat capacity
eoretical calculation of te eat capacity Principle of equipartition of energy Heat capacity of ideal and real gases Heat capacity of solids: DulongPetit, Einstein, Debye models Heat capacity of metals
More informationStrategic trading in a dynamic noisy market. Dimitri Vayanos
LSE Researc Online Article (refereed) Strategic trading in a dynamic noisy market Dimitri Vayanos LSE as developed LSE Researc Online so tat users may access researc output of te Scool. Copyrigt and Moral
More informationVerifying Numerical Convergence Rates
1 Order of accuracy Verifying Numerical Convergence Rates We consider a numerical approximation of an exact value u. Te approximation depends on a small parameter, suc as te grid size or time step, and
More informationThe modelling of business rules for dashboard reporting using mutual information
8 t World IMACS / MODSIM Congress, Cairns, Australia 37 July 2009 ttp://mssanz.org.au/modsim09 Te modelling of business rules for dasboard reporting using mutual information Gregory Calbert Command, Control,
More informationCollege Planning Using Cash Value Life Insurance
College Planning Using Cas Value Life Insurance CAUTION: Te advisor is urged to be extremely cautious of anoter college funding veicle wic provides a guaranteed return of premium immediately if funded
More informationGuide to Cover Letters & Thank You Letters
Guide to Cover Letters & Tank You Letters 206 Strebel Student Center (315) 7923087 Fax (315) 7923370 TIPS FOR WRITING A PERFECT COVER LETTER Te resume never travels alone. Eac time you submit your resume
More informationMATHEMATICS FOR ENGINEERING DIFFERENTIATION TUTORIAL 1  BASIC DIFFERENTIATION
MATHEMATICS FOR ENGINEERING DIFFERENTIATION TUTORIAL 1  BASIC DIFFERENTIATION Tis tutorial is essential prerequisite material for anyone stuing mecanical engineering. Tis tutorial uses te principle of
More informationTorchmark Corporation 2001 Third Avenue South Birmingham, Alabama 35233 Contact: Joyce Lane 9725693627 NYSE Symbol: TMK
News Release Torcmark Corporation 2001 Tird Avenue Sout Birmingam, Alabama 35233 Contact: Joyce Lane 9725693627 NYSE Symbol: TMK TORCHMARK CORPORATION REPORTS FOURTH QUARTER AND YEAREND 2004 RESULTS
More informationACT Math Facts & Formulas
Numbers, Sequences, Factors Integers:..., 3, 2, 1, 0, 1, 2, 3,... Rationals: fractions, tat is, anyting expressable as a ratio of integers Reals: integers plus rationals plus special numbers suc as
More informationFINITE DIFFERENCE METHODS
FINITE DIFFERENCE METHODS LONG CHEN Te best known metods, finite difference, consists of replacing eac derivative by a difference quotient in te classic formulation. It is simple to code and economic to
More informationA strong credit score can help you score a lower rate on a mortgage
NET GAIN Scoring points for your financial future AS SEEN IN USA TODAY S MONEY SECTION, JULY 3, 2007 A strong credit score can elp you score a lower rate on a mortgage By Sandra Block Sales of existing
More informationNote nine: Linear programming CSE 101. 1 Linear constraints and objective functions. 1.1 Introductory example. Copyright c Sanjoy Dasgupta 1
Copyrigt c Sanjoy Dasgupta Figure. (a) Te feasible region for a linear program wit two variables (see tet for details). (b) Contour lines of te objective function: for different values of (profit). Te
More informationDetermine the perimeter of a triangle using algebra Find the area of a triangle using the formula
Student Name: Date: Contact Person Name: Pone Number: Lesson 0 Perimeter, Area, and Similarity of Triangles Objectives Determine te perimeter of a triangle using algebra Find te area of a triangle using
More information 1  Handout #22 May 23, 2012 Huffman Encoding and Data Compression. CS106B Spring 2012. Handout by Julie Zelenski with minor edits by Keith Schwarz
CS106B Spring 01 Handout # May 3, 01 Huffman Encoding and Data Compression Handout by Julie Zelenski wit minor edits by Keit Scwarz In te early 1980s, personal computers ad ard disks tat were no larger
More informationThe Demand for Food Away From Home FullService or Fast Food?
United States Department of Agriculture Electronic Report from te Economic Researc Service www.ers.usda.gov Agricultural Economic Report No. 829 January 2004 Te Demand for Food Away From Home FullService
More informationThe Dynamics of Movie Purchase and Rental Decisions: Customer Relationship Implications to Movie Studios
Te Dynamics of Movie Purcase and Rental Decisions: Customer Relationsip Implications to Movie Studios Eddie Ree Associate Professor Business Administration Stoneill College 320 Wasington St Easton, MA
More informationMath Test Sections. The College Board: Expanding College Opportunity
Taking te SAT I: Reasoning Test Mat Test Sections Te materials in tese files are intended for individual use by students getting ready to take an SAT Program test; permission for any oter use must be sougt
More informationSAT Subject Math Level 1 Facts & Formulas
Numbers, Sequences, Factors Integers:..., 3, 2, 1, 0, 1, 2, 3,... Reals: integers plus fractions, decimals, and irrationals ( 2, 3, π, etc.) Order Of Operations: Aritmetic Sequences: PEMDAS (Parenteses
More informationTRADING AWAY WIDE BRANDS FOR CHEAP BRANDS. Swati Dhingra London School of Economics and CEP. Online Appendix
TRADING AWAY WIDE BRANDS FOR CHEAP BRANDS Swati Dingra London Scool of Economics and CEP Online Appendix APPENDIX A. THEORETICAL & EMPIRICAL RESULTS A.1. CES and Logit Preferences: Invariance of Innovation
More informationLecture 10. Limits (cont d) Onesided limits. (Relevant section from Stewart, Seventh Edition: Section 2.4, pp. 113.)
Lecture 10 Limits (cont d) Onesided its (Relevant section from Stewart, Sevent Edition: Section 2.4, pp. 113.) As you may recall from your earlier course in Calculus, we may define onesided its, were
More informationANALYTICAL REPORT ON THE 2010 URBAN EMPLOYMENT UNEMPLOYMENT SURVEY
THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA CENTRAL STATISTICAL AGENCY ANALYTICAL REPORT ON THE 2010 URBAN EMPLOYMENT UNEMPLOYMENT SURVEY Addis Ababa December 2010 STATISTICAL BULLETIN TABLE OF CONTENT
More informationf(a + h) f(a) f (a) = lim
Lecture 7 : Derivative AS a Function In te previous section we defined te derivative of a function f at a number a (wen te function f is defined in an open interval containing a) to be f (a) 0 f(a + )
More informationLecture 10: What is a Function, definition, piecewise defined functions, difference quotient, domain of a function
Lecture 10: Wat is a Function, definition, piecewise defined functions, difference quotient, domain of a function A function arises wen one quantity depends on anoter. Many everyday relationsips between
More informationReferendumled Immigration Policy in the Welfare State
Referendumled Immigration Policy in te Welfare State YUJI TAMURA Department of Economics, University of Warwick, UK First version: 12 December 2003 Updated: 16 Marc 2004 Abstract Preferences of eterogeneous
More informationAverage and Instantaneous Rates of Change: The Derivative
9.3 verage and Instantaneous Rates of Cange: Te Derivative 609 OBJECTIVES 9.3 To define and find average rates of cange To define te derivative as a rate of cange To use te definition of derivative to
More informationWhat is Advanced Corporate Finance? What is finance? What is Corporate Finance? Deciding how to optimally manage a firm s assets and liabilities.
Wat is? Spring 2008 Note: Slides are on te web Wat is finance? Deciding ow to optimally manage a firm s assets and liabilities. Managing te costs and benefits associated wit te timing of cas in and outflows
More informationSAMPLE DESIGN FOR THE TERRORISM RISK INSURANCE PROGRAM SURVEY
ASA Section on Survey Researc Metods SAMPLE DESIG FOR TE TERRORISM RISK ISURACE PROGRAM SURVEY G. ussain Coudry, Westat; Mats yfjäll, Statisticon; and Marianne Winglee, Westat G. ussain Coudry, Westat,
More informationStrategic trading and welfare in a dynamic market. Dimitri Vayanos
LSE Researc Online Article (refereed) Strategic trading and welfare in a dynamic market Dimitri Vayanos LSE as developed LSE Researc Online so tat users may access researc output of te Scool. Copyrigt
More informationA Note on the Optimal Supply of Public Goods and the Distortionary Cost of Taxation
A Note on the Optimal Supply of Public Goods and the Distortionary Cost of Taxation Louis Kaplow * Abstract In a recent article, I demonstrated that, under standard simplifying assumptions, it is possible
More informationPretrial Settlement with Imperfect Private Monitoring
Pretrial Settlement wit Imperfect Private Monitoring Mostafa Beskar University of New Hampsire JeeHyeong Park y Seoul National University July 2011 Incomplete, Do Not Circulate Abstract We model pretrial
More informationNotes: Most of the material in this chapter is taken from Young and Freedman, Chap. 12.
Capter 6. Fluid Mecanics Notes: Most of te material in tis capter is taken from Young and Freedman, Cap. 12. 6.1 Fluid Statics Fluids, i.e., substances tat can flow, are te subjects of tis capter. But
More informationEC201 Intermediate Macroeconomics. EC201 Intermediate Macroeconomics Problem set 8 Solution
EC201 Intermediate Macroeconomics EC201 Intermediate Macroeconomics Prolem set 8 Solution 1) Suppose tat te stock of mone in a given econom is given te sum of currenc and demand for current accounts tat
More informationAn Interest Rate Model
An Interest Rate Model Concepts and Buzzwords Building Price Tree from Rate Tree Lognormal Interest Rate Model Nonnegativity Volatility and te Level Effect Readings Tuckman, capters 11 and 12. Lognormal
More informationOptimized Data Indexing Algorithms for OLAP Systems
Database Systems Journal vol. I, no. 2/200 7 Optimized Data Indexing Algoritms for OLAP Systems Lucian BORNAZ Faculty of Cybernetics, Statistics and Economic Informatics Academy of Economic Studies, Bucarest
More informationBackground Facts on Economic Statistics
Background Facts on Economic Statistics 2003:3 SAMU Te system for coordination of frame populations and samples from te Business Register at Statistics Sweden epartment of Economic Statistics Te series
More informationThe Elasticity of Taxable Income: A NonTechnical Summary
The Elasticity of Taxable Income: A NonTechnical Summary John Creedy The University of Melbourne Abstract This paper provides a nontechnical summary of the concept of the elasticity of taxable income,
More informationEVALUATE TxDOT CHIP SEAL BINDER PERFORMANCE USING PAVEMENT MANAGEMENT INFORMATION SYSTEM AND FIELD MEASUREMENT DATA SAN ANTONIO DISTRICT
EVALUATE TxDOT CHIP SEAL BINDER PERFORMANCE USING PAVEMENT MANAGEMENT INFORMATION SYSTEM AND FIELD MEASUREMENT DATA SAN ANTONIO DISTRICT Interim Researc Report #3 Prepared by: Douglas D. Gransberg, P.D.,
More informationSubstitution and income effects at the aggregate level: The effective budget constraint of the government and the flypaper effect
Substitution and income effects at the aggregate level: The effective budget constraint of the government and the flypaper effect Cristian F. Sepulveda * Tulane University November, 2013 Abstract This
More informationDynamic Competitive Insurance
Dynamic Competitive Insurance Vitor Farina Luz June 26, 205 Abstract I analyze longterm contracting in insurance markets wit asymmetric information and a finite or infinite orizon. Risk neutral firms
More informationIn other words the graph of the polynomial should pass through the points
Capter 3 Interpolation Interpolation is te problem of fitting a smoot curve troug a given set of points, generally as te grap of a function. It is useful at least in data analysis (interpolation is a form
More informationAnalyzing the Effects of Insuring Health Risks:
Analyzing te Effects of Insuring Healt Risks: On te Tradeoff between Sort Run Insurance Benefits vs. Long Run Incentive Costs Harold L. Cole University of Pennsylvania and NBER Soojin Kim University of
More information2 Limits and Derivatives
2 Limits and Derivatives 2.7 Tangent Lines, Velocity, and Derivatives A tangent line to a circle is a line tat intersects te circle at exactly one point. We would like to take tis idea of tangent line
More informationComparison between two approaches to overload control in a Real Server: local or hybrid solutions?
Comparison between two approaces to overload control in a Real Server: local or ybrid solutions? S. Montagna and M. Pignolo Researc and Development Italtel S.p.A. Settimo Milanese, ITALY Abstract Tis wor
More informationThe Elasticity of Taxable Income and the Implications of Tax Evasion for Deadweight Loss
The Elasticity of Taxable Income and the Implications of Tax Evasion for Deadweight Loss Jon Bakija, Williams College This draft: February 2014 Original draft: April 2011 I. The Elasticity of Taxable Income
More informationWe consider the problem of determining (for a short lifecycle) retail product initial and
Optimizing Inventory Replenisment of Retail Fasion Products Marsall Fiser Kumar Rajaram Anant Raman Te Warton Scool, University of Pennsylvania, 3620 Locust Walk, 3207 SHDH, Piladelpia, Pennsylvania 191046366
More informationGovernment Debt and Optimal Monetary and Fiscal Policy
Government Debt and Optimal Monetary and Fiscal Policy Klaus Adam Manneim University and CEPR  preliminary version  June 7, 21 Abstract How do di erent levels of government debt a ect te optimal conduct
More informationThe Taxable Income Elasticity and the Implications of Tax Evasion for Deadweight Loss. Jon Bakija, April 2011
The Taxable Income Elasticity and the Implications of Tax Evasion for Deadweight Loss Jon Bakija, April 2011 I. The Taxable Income Elasticity Literature Traditionally, the microeconometric literature on
More informationResearch on the Antiperspective Correction Algorithm of QR Barcode
Researc on te Antiperspective Correction Algoritm of QR Barcode Jianua Li, YiWen Wang, YiJun Wang,Yi Cen, Guoceng Wang Key Laboratory of Electronic Tin Films and Integrated Devices University of Electronic
More information1.6. Analyse Optimum Volume and Surface Area. Maximum Volume for a Given Surface Area. Example 1. Solution
1.6 Analyse Optimum Volume and Surface Area Estimation and oter informal metods of optimizing measures suc as surface area and volume often lead to reasonable solutions suc as te design of te tent in tis
More informationSchedulability Analysis under Graph Routing in WirelessHART Networks
Scedulability Analysis under Grap Routing in WirelessHART Networks Abusayeed Saifulla, Dolvara Gunatilaka, Paras Tiwari, Mo Sa, Cenyang Lu, Bo Li Cengjie Wu, and Yixin Cen Department of Computer Science,
More informationPressure. Pressure. Atmospheric pressure. Conceptual example 1: Blood pressure. Pressure is force per unit area:
Pressure Pressure is force per unit area: F P = A Pressure Te direction of te force exerted on an object by a fluid is toward te object and perpendicular to its surface. At a microscopic level, te force
More informationReinforced Concrete Beam
Mecanics of Materials Reinforced Concrete Beam Concrete Beam Concrete Beam We will examine a concrete eam in ending P P A concrete eam is wat we call a composite eam It is made of two materials: concrete
More informationFree Shipping and Repeat Buying on the Internet: Theory and Evidence
Free Sipping and Repeat Buying on te Internet: eory and Evidence Yingui Yang, Skander Essegaier and David R. Bell 1 June 13, 2005 1 Graduate Scool of Management, University of California at Davis (yiyang@ucdavis.edu)
More information1 Derivatives of Piecewise Defined Functions
MATH 1010E University Matematics Lecture Notes (week 4) Martin Li 1 Derivatives of Piecewise Define Functions For piecewise efine functions, we often ave to be very careful in computing te erivatives.
More informationFINANCIAL SECTOR INEFFICIENCIES AND THE DEBT LAFFER CURVE
INTERNATIONAL JOURNAL OF FINANCE AND ECONOMICS Int. J. Fin. Econ. 10: 1 13 (2005) Publised online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/ijfe.251 FINANCIAL SECTOR INEFFICIENCIES
More informationEnvironmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital 1
Journal of Environmental Economics and Management 7, 65 8 Ž 999. Article ID jeem.998.6, available online at ttp: www.idealibrary.com on Environmental Policy and Competitiveness: Te Porter ypotesis and
More informationA FLOW NETWORK ANALYSIS OF A LIQUID COOLING SYSTEM THAT INCORPORATES MICROCHANNEL HEAT SINKS
A FLOW NETWORK ANALYSIS OF A LIQUID COOLING SYSTEM THAT INCORPORATES MICROCHANNEL HEAT SINKS Amir Radmer and Suas V. Patankar Innovative Researc, Inc. 3025 Harbor Lane Nort, Suite 300 Plymout, MN 55447
More informationPioneer Fund Story. Searching for Value Today and Tomorrow. Pioneer Funds Equities
Pioneer Fund Story Searcing for Value Today and Tomorrow Pioneer Funds Equities Pioneer Fund A Cornerstone of Financial Foundations Since 1928 Te fund s relatively cautious stance as kept it competitive
More informationWorking Capital 2013 UK plc s unproductive 69 billion
2013 Executive summary 2. Te level of excess working capital increased 3. UK sectors acieve a mixed performance 4. Size matters in te supply cain 6. Not all companies are overflowing wit cas 8. Excess
More informationInvesting in Roads: Pricing, Costs and New Capacity
Investing in Roads: Pricing, Costs and New Capacity Cristoper rcer Stepen Glaister Department of Civil and Environmental Engineering Imperial College London November 2006 Researc commissioned by te Independent
More informationa joint initiative of Cost of Production Calculator
a joint initiative of Cost of Production Calculator 1 KEY BENEFITS Learn to use te MAKING MORE FROM SHEEP cost of production calculator to: Measure te performance of your seep enterprise year on year Compare
More informationDistances in random graphs with infinite mean degrees
Distances in random graps wit infinite mean degrees Henri van den Esker, Remco van der Hofstad, Gerard Hoogiemstra and Dmitri Znamenski April 26, 2005 Abstract We study random graps wit an i.i.d. degree
More informationTHE NEISS SAMPLE (DESIGN AND IMPLEMENTATION) 1997 to Present. Prepared for public release by:
THE NEISS SAMPLE (DESIGN AND IMPLEMENTATION) 1997 to Present Prepared for public release by: Tom Scroeder Kimberly Ault Division of Hazard and Injury Data Systems U.S. Consumer Product Safety Commission
More informationA system to monitor the quality of automated coding of textual answers to open questions
Researc in Official Statistics Number 2/2001 A system to monitor te quality of automated coding of textual answers to open questions Stefania Maccia * and Marcello D Orazio ** Italian National Statistical
More informationWriting Mathematics Papers
Writing Matematics Papers Tis essay is intended to elp your senior conference paper. It is a somewat astily produced amalgam of advice I ave given to students in my PDCs (Mat 4 and Mat 9), so it s not
More informationSection 3.3. Differentiation of Polynomials and Rational Functions. Difference Equations to Differential Equations
Difference Equations to Differential Equations Section 3.3 Differentiation of Polynomials an Rational Functions In tis section we begin te task of iscovering rules for ifferentiating various classes of
More informationAreaSpecific Recreation Use Estimation Using the National Visitor Use Monitoring Program Data
United States Department of Agriculture Forest Service Pacific Nortwest Researc Station Researc Note PNWRN557 July 2007 AreaSpecific Recreation Use Estimation Using te National Visitor Use Monitoring
More informationNew Vocabulary volume
. Plan Objectives To find te volume of a prism To find te volume of a cylinder Examples Finding Volume of a Rectangular Prism Finding Volume of a Triangular Prism 3 Finding Volume of a Cylinder Finding
More informationYale ICF Working Paper No. 0511 May 2005
Yale ICF Working Paper No. 0511 May 2005 HUMAN CAPITAL, AET ALLOCATION, AND LIFE INURANCE Roger G. Ibbotson, Yale cool of Management, Yale University Peng Cen, Ibbotson Associates Mose Milevsky, culic
More information4.1 Rightangled Triangles 2. 4.2 Trigonometric Functions 19. 4.3 Trigonometric Identities 36. 4.4 Applications of Trigonometry to Triangles 53
ontents 4 Trigonometry 4.1 Rigtangled Triangles 4. Trigonometric Functions 19 4.3 Trigonometric Identities 36 4.4 pplications of Trigonometry to Triangles 53 4.5 pplications of Trigonometry to Waves 65
More informationSocial longterm care insurance with twosided altruism
IDEI  852 July 2015 Social longterm care insurance wit twosided altruism Helmut Cremer, Pierre Pestieau, Kerstin Roeder 7 Social longterm care insurance wit twosided altruism 1 Helmut Cremer 2, Pierre
More informationDEPARTMENT OF ECONOMICS HOUSEHOLD DEBT AND FINANCIAL ASSETS: EVIDENCE FROM GREAT BRITAIN, GERMANY AND THE UNITED STATES
DEPARTMENT OF ECONOMICS HOUSEHOLD DEBT AND FINANCIAL ASSETS: EVIDENCE FROM GREAT BRITAIN, GERMANY AND THE UNITED STATES Sara Brown, University of Leicester, UK Karl Taylor, University of Leicester, UK
More informationAsymmetric Trade Liberalizations and Current Account Dynamics
Asymmetric Trade Liberalizations and Current Account Dynamics Alessandro Barattieri January 15, 2015 Abstract Te current account deficits of Spain, Portugal and Greece are te result of large deficits in
More informationChapter 10: Refrigeration Cycles
Capter 10: efrigeration Cycles Te vapor compression refrigeration cycle is a common metod for transferring eat from a low temperature to a ig temperature. Te above figure sows te objectives of refrigerators
More informationImproved dynamic programs for some batcing problems involving te maximum lateness criterion A P M Wagelmans Econometric Institute Erasmus University Rotterdam PO Box 1738, 3000 DR Rotterdam Te Neterlands
More informationPretrial Settlement with Imperfect Private Monitoring
Pretrial Settlement wit Imperfect Private Monitoring Mostafa Beskar Indiana University JeeHyeong Park y Seoul National University April, 2016 Extremely Preliminary; Please Do Not Circulate. Abstract We
More informationHuman Capital, Asset Allocation, and Life Insurance
Human Capital, Asset Allocation, and Life Insurance By: P. Cen, R. Ibbotson, M. Milevsky and K. Zu Version: February 25, 2005 Note: A Revised version of tis paper is fortcoming in te Financial Analysts
More informationSWITCH T F T F SELECT. (b) local schedule of two branches. (a) ifthenelse construct A & B MUX. one iteration cycle
768 IEEE RANSACIONS ON COMPUERS, VOL. 46, NO. 7, JULY 997 Compileime Sceduling of Dynamic Constructs in Dataæow Program Graps Soonoi Ha, Member, IEEE and Edward A. Lee, Fellow, IEEE Abstract Sceduling
More informationNAFN NEWS SPRING2011 ISSUE 7. Welcome to the Spring edition of the NAFN Newsletter! INDEX. Service Updates Follow That Car! Turn Back The Clock
NAFN NEWS ISSUE 7 SPRING2011 Welcome to te Spring edition of te NAFN Newsletter! Spring is in te air at NAFN as we see several new services cropping up. Driving and transport emerged as a natural teme
More informationON LOCAL LIKELIHOOD DENSITY ESTIMATION WHEN THE BANDWIDTH IS LARGE
ON LOCAL LIKELIHOOD DENSITY ESTIMATION WHEN THE BANDWIDTH IS LARGE Byeong U. Park 1 and Young Kyung Lee 2 Department of Statistics, Seoul National University, Seoul, Korea Tae Yoon Kim 3 and Ceolyong Park
More informationSurface Areas of Prisms and Cylinders
12.2 TEXAS ESSENTIAL KNOWLEDGE AND SKILLS G.10.B G.11.C Surface Areas of Prisms and Cylinders Essential Question How can you find te surface area of a prism or a cylinder? Recall tat te surface area of
More information