Equity-efficiency implications of a European tax and transfer system

Download

index.pdf

Date

2021-8-01

Author

Gürer, Eren

Metadata

Show full item record

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Item Usage Stats

69
views

27
downloads

This study simulates three income tax scenarios in a Mirrleesian setting for 24 EU countries using data from the 2014 Structure of Earnings Survey. In scenario 1, each country individually maximizes its own welfare (benchmark). In scenarios 2 and 3, total welfare in the EU is maximized over a common budget constraint. Unlike scenario 2, the social planner of scenario 3 differentiates taxes by country of residence. If a common tax and transfer system were implemented in the EU, countries with a relatively higher mean wage rate-particularly those in Western and some of the Northern European countries-would transfer resources to the others. Scenario 2 implies increased labor distortions for almost all countries and, hence, leads to a contraction in total output. Scenario 3 produces higher (lower) marginal taxes for high- (low-) mean countries compared to the benchmark. The change in total output depends on the income effects on labor supply. Overall, total welfare is higher for the scenarios involving a European tax and transfer system despite more than two thirds of all the agents becoming worse off relative to the benchmark. A politically more feasible integrated tax system improves the well-being of almost half of all the EU but considerably reduces the aggregate welfare benefits.

Subject Keywords

H21, H24, F55

URI

https://hdl.handle.net/11511/101841

Journal

SOCIAL CHOICE AND WELFARE

DOI

https://doi.org/10.1007/s00355-021-01314-1

Collections

Department of Economics, Article

Suggestions

OpenMETU
Core

Social capital, innovation and growth: Evidence from Europe Akçomak, İbrahim Semih (2009-07-01) This paper investigates the interplay between social capital, innovation and per capita income growth in the European Union. We model and identify innovation as an important mechanism that transforms social capital into higher income levels. In an empirical investigation of 102 European regions in the period 1990-2002, we show that higher innovation performance is conducive to per capita income growth and that social capital affects this growth indirectly by fostering innovation. Our estimates suggest that ...
Tax expenditures in the European Union and Turkey Coşkun, Zeynep; Aşçıoğlu Öz, Gamze; Department of European Studies (2010) This thesis analyzes the tax incentives and protection measures in the European Union and Turkey. The definition and classification of these measures in the form of tax expenditures will be stated in this study. EU’s tax provisions in sources of the Acquis Communautaire will be described followed by the practice in the EU’s major policy fields. The legal background and major policy implications of these tax policy measures in the framework of Turkey’s tax laws will be explained followed by an evaluation of ...
Real exchange rates and real interest rate differentials : an empirical investigation Can Mutan, Oya; Özmen, Erdal; Department of Economics (2005) This study investigates the validity of the real exchange rate-real interest rate differential (RERI) relationship for a sample of twenty-three developing and developed countries. The results based on the Johansen cointegration analysis suggest the validity of the long-run RERI relationship only for a small number of countries including Canada, Italy, Switzerland, Belgium, Chile, Israel and Norway. Real interest rate differentials are found to be positively associated with real exchange rates in the long-ru...
Value-added tax in European taxation system and harmonization of vat during the integration process of Turkey Sezgin, Fevza; Aşık, Serap; Department of European Studies (2007) This thesis analyzes tha value added tax (VAT) in the European Union (EU). Primarily,the issue of tax harmonization and legal basis of tax harmonization in the context of European Union is studied. Furthermore, this thesis makes a comparision of VAT legislation in the EU and Turkey and identifies differences between the EU VAT system and Turkish VAT Law.Lastly, within the framework of finding similarities between Turkish and EU VAT legislation,the thesis tries to examine whether major harmonization laws are...
Nonlinear models, composite longer leading indicator and forecasts for UK real GDP Ocal, N (Informa UK Limited, 2006-05-20) This paper examines the role of the Office for National Statistics Composite Longer Leading Indicator, in nonlinear business cycle models for growth rates of UK real gross domestic product (GDP). These models are of the smooth transition regression class, with the transition between "regimes'' expressed as functions of lagged changes in the leading indicator. In general, evidence is found of business cycle regime asymmetries, with increases and decreases in the leading indicator implying distinct responses ...

Citation Formats

E. Gürer, “Equity-efficiency implications of a European tax and transfer system,” SOCIAL CHOICE AND WELFARE, vol. 57, no. 2, pp. 301–346, 2021, Accessed: 00, 2023. [Online]. Available: https://hdl.handle.net/11511/101841.