Most jurisdictions exempt nonprofit firms from property, sales, and corporate income taxes in various industries, such as health care and education, in which both nonprofit and for-profit firms compete. Crosssection estimates using state tax data indicate that these exemptions significantly increase the market share of nonprofit firms vis-d-vis their for-profit counterparts. The relative market...

A tax buyout is a contract between tax authorities and a tax payer which reduces the marginal income tax rate in exchange for a lump-sum payment. While previous contributions have focussed on labour supply, we consider the interaction with tax evasion and show that a buyout can increase expected tax revenues. This will be the case if (1) the audit probability is constant and the penalty for eva...

Proposals for fundamental reform of the federal tax code are receiving increased attention in the business press and among economic analysts and policymakers. President Bush has identified tax reform as a top priority, calling for a tax system that is “pro-growth, easy to understand, and fair to all.” Moreover, the President has appointed a commission to consider different approaches to tax ref...

The principal objective of our research is to examine whether the earned income tax credit (EITC), a broad-based income support program that has been shown to increase employment and income among poor working families, also improves their health and access to care. A finding that the EITC has a positive impact on the health of the American public may help guide deliberations about its future at...

This paper analyzes optimal linear taxes on labor income and savings in a twoperiod life-cycle model with ex ante identical households, endogenous leisure demands in both periods, and general processes of skill shocks over the life cycle. We demonstrate that the Atkinson-Stiglitz theorem breaks down under risk. Capital taxes are employed besides labor income taxes for two distinct reasons: i) c...

The literatures dealing with voting, optimal income taxation, and implementation are integrated here to address the problem of voting over income taxes. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realization...

The conventional view within the endogenous growth literature is that interest income taxes impede economic growth and investment subsidies promote economic growth. The present paper lays out a simple framework to see whether this is still true when non-renewable resources enter the ”growth engine” in an essential way. It is not! The framework allows a rich set of determinants of longrun growth...

This paper tries to answer the question how taxation of corporate and individual income affects competition among firms for highly-skilled human resources like CEOs. It shows that individual income taxes can perform a substantial impact on the outcome of such a competition if marginal tax rates are different like in an international labor market. Additionally, it presents the surprising result ...

___________________________________________________________________ A problem facing the United States is financing retirement consumption as its population ages. Policy analysts increasingly advocate savings-for-retirement systems, but are concerned with insufficient savings opportunities with limited government debt. This concern is unwarranted. First, there is more productive capital than co...

This paper studies the optimal redistribution of income inequality caused by the presence of search and matching frictions in the labor market. We study this problem in the context of a directed search model of the labor market populated by homogenous workers and heterogeneous firms. The optimal redistribution can be attained using a positive unemployment benefit and an increasing and regressiv...