A dividend imputation tax system provides shareholders with a credit (for corporate tax paid) that can be used to offset personal tax on dividend income. This paper shows how to infer the value of imputation tax credits from the prices of derivative securities that are unique to Australian retail markets. We also test whether a tax law amendment that was designed to prevent the trading of imput...

Why Pay Taxes When No One Else Does? In this paper we try to understand the phenomena whereby a large proportion of the population evades tax payments. We present a model which incorporates elements from the theory of information cascades with the standard model of tax evasion and analyze the connection between the decision of a potential tax evader, the number of tax evaders and the number cau...

This paper develops and analyzes a model in which tax considerations and financial reporting considerations have countervailing effects on a firm’s investments in internally developed intangible assets. It also proposes and estimates a new measure of tax preferences, which we call the economic effective tax rate. This measure reflects both investments in intangible assets and the use of debt fi...

We developed a simple monetary model to study the effects of tax evasion on the optimal inflation tax. The model is constructed so that inflation might be an indirect way of taxing the underground sector of the economy. We show that while there are theoretical reasons for positive optimal inflation rates, the effects are quantitatively small, even in countries with large underground sectors. We...

The Last Refuge of a Scoundrel? Patriotism and Tax Compliance We study the effects of patriotism on tax compliance. In particular, we assume that individuals feel a (random draw of) warm glow from honestly paying their taxes. A higher expected warm glow reduces the government's optimal audit probability and yields higher tax compliance. Second, individuals with higher warm glow are less likely ...

Are Earnings Inequality and Mobility Overstated? The Impact of Non-Classical Measurement Error Measures of inequality and mobility based on self-reported earnings reflect attributes of both the joint distribution of earnings across time and the joint distribution of measurement error and earnings. While classical measurement error would increase measures of inequality and mobility there is subs...

This paper examines elements of British tax policy and discusses their implications for the US, where several recent proposals would mirror aspects of the British system. These include reducing filing requirements under the individual income tax, indexing capital gains for inflation, cutting mortgage interest deductions, enacting a value added tax, and integrating the corporate and personal inc...

Do corporate inversions cost the US Treasury billions of dollars in tax revenue, justifying legislative responses and even strong-arming corporations from moving their tax domicile abroad? We show that corporate inversions not only do not appear to reduce, but, paradoxically, are even likely to increase tax collections by the US Treasury. JEL classification: M40, G34, H25, F23

Theories of political redistribution are tested using data collected in three phases of the International Social Survey Programme. Individuals categorized as having high, middle, or low incomes were asked whether they consider the overall tax burden in their countries too high, too low or about right. Very few citizens indicated that they were satisfied with tax systems; most believed that taxe...

Field Editor: S. Parker We investigate the role of health insurance coverage in explaining transitions in and out of entrepreneurship in the U.S. We first consider the effect of individual coverage, along with that from a spouse, on the likelihood of entry and exit. Next, we examine the tax deductions granted to the self-employed through amendments made to the 1986 Tax Reform Act. Using the Cur...