財政學(xué)課件chap16

1、Chapter 16 Personal Taxation and BehaviorPublic FinanceAaron S. Yelowitz - Copyright 2003 McGraw-Hill.1IntroductionA key policy question is how do households respond to the incentives presented in the U.S. tax code?We will examine:Labor supplySavingHousingPortfolio Composition.2Labor Supply:Theoreti

2、cal ConsiderationsRecall, from previous discussions of the welfare system, that a labor supply problem has the following elements:Time Endowment (T)Budget constraint, with a price of leisure of $wPreferences.3Labor Supply:Theoretical ConsiderationsFigure 16.1 shows a typical labor supply framework.P

3、erson chooses FT of work in this example and attains utility on indifference curve ii.4Figure 16.1.5Labor Supply:Theoretical ConsiderationsHow do taxes affect the work decision?In Figure 16.2, tax reduces wage rateFrom $w to $(1-t)w, because person only cares about part of wage he gets to keepTax re

4、duces the opportunity cost of another hour of leisureBudget constraint rotates from TD to TH.6Figure 16.2.7Labor Supply:Theoretical ConsiderationsBased on the specific indifference curves in Figure 16.2, we can conclude the following:The person is worse off after the tax, that is, utility is lowerIn

5、 this case, the person reduces hours of work from FT to IT.8Labor Supply:Theoretical ConsiderationsIs it always the case that the person will reduce hours of work when a tax is imposed (or increased)?No. Figure 16.3 shows a case where hours of work increases from FT to JT (and the person is still wo

6、rse off relative to no taxes).9Figure 16.3.10Labor Supply:Theoretical ConsiderationsIncreasing (or decreasing) taxes changes the after-tax wage rate. Changing the wage rate has two effects:Substitution effect leisure is relatively less costly after the effective wage is cut, so a person substitutes

7、toward leisure and away from work ( leisure).Income effect The person feels poorer after the effective wage cut and, if leisure is a normal good, the person consumes less of it ( leisure).11Labor Supply:Theoretical ConsiderationsProgressive taxesConsider three tax ratest1 for income under Lt2 for in

8、come between L and Mt3 for income greater than MThe effective wage rate (and the slope of the budget constraint) changes as hours of work increase.12Labor Supply:Theoretical ConsiderationsFigure 16.4 depicts this situation.Budget constraint is now TLMN.In this figure, person maximizes utility at E4.

9、One common theoretical prediction that arises from kinked budget constraints is that many people should locate at the kink points.13Figure 16.4.14Labor Supply:Empirical FindingsTheory suggests labor supply should depend on:After-tax wagePreferences (factors like age, gender, marital status, and chil

10、dren)Econometricians have estimated regression equations relating hours of work to these variables.15Labor Supply:Empirical FindingsFor “prime-age” males (ages 20 to 60), effect of changes in the net wage on hours of work is small.Elasticity of 0.05, meaning that a 10% increase in the wage increase

11、hours of work by %.Elasticities for women vary widely, but married women seem quite sensitive to changes in the net wage.16Labor Supply:Some CaveatsDemand-side considerationsLarge influx of workers could lower equilibrium wage or change consumption patternsIndividual versus group effectsEffects of t

12、ax policy could have ambiguous effects; some may increase work, and others may decrease work.17Labor Supply:Some CaveatsOther dimensions of labor supplyHours of work the usual metricHuman capital investmentProportional income tax could lead to no change in investment because both the benefits (incre

13、ased wages) and costs (forgone current earnings) are taxed.18Labor Supply:Some CaveatsCompensation packageFringe benefits not taxedExpenditure sideHow tax revenue is spent (e.g., national parks versus child care facilities) could affect work effort.19Labor Supply:Labor Supply and Tax RevenuesHow do

14、tax collections vary with the tax rate?Consider the supply curve, SL, in Figure 16.5.Shows optimal work effort for each after-tax wage in this case, the substitution effect dominates.20Figure 16.5.21Labor Supply:Labor Supply and Tax RevenuesAt wage w, work L0, and no tax revenue is collected.At wage

15、 (1-t1)w, work L1, and collect t1L1 in tax revenue.At wage (1-t2)w, work L2, and collect t2L2 in tax revenue.As tax rate gets very high, total tax revenue will eventually fall (to zero).22Labor Supply:Labor Supply and Tax RevenuesFigure 16.6 maps out the relationship between tax rates and tax revenu

16、e.Obviously, if taxes exceed tA, could increase tax revenue by cutting tax rates.The contentions that tax rates exceeded tA were popularly known as being on the wrong side of the Laffer curve and were an important tenet in supply-side economics.23Figure 16.6.24Labor Supply:Labor Supply and Tax Reven

17、uesSeveral points deserve mention:Shape of Laffer curve depends on elasticity of hours with respect to after-tax wageAlthough not likely in practice, Figure 16.6 suggests lower tax rates can lead to higher collectionsEmpirical questionNot only hours of work, but taxable income.25SavingLife-cycle mod

18、el says that individuals consumption and saving decisions during a year are the result of a process that considers their lifetime economic circumstances.26SavingConsider a model with the following features:Two periods (t=0 or 1)Working life and retirementTwo income flows (I0 and I1).Earnings and pen

19、sion incomePreferences over consumption (C0 and C1)Consumption in present and future.27SavingFigure 16.7 incorporates this detail into an intertemporal budget constraint.Endowment point is the point where persons per-period consumption matches their per-period income.With perfect capital markets, ca

20、n save or borrow at interest rate r. Gives budget constraint MN.28Figure 16.7.29SavingThis figure makes clear that a person can borrow against future pension wealth or save current earnings for future.These are simply movements along the budget constraint MN.If current consumption is less than I0, t

21、he person is saving, otherwise he is borrowing.30SavingFigure 16.8 imposes some indifference curves on the budget constraint.Given these preferences, the person chooses point E1, in which he is saving I0-C0 for retirement.Capital markets allow this person to attain higher utility than at the endowme

22、nt point.31Figure 16.8.32SavingHow would taxes affect saving?We consider two cases:Case I: Interest earnings are taxable, and interest payments are deductibleCase II: Interest earnings are taxable, and interest payments are not deductible.33SavingCase I: Interest earnings are taxable, and interest p

23、ayments are deductibleWith a proportional tax t, the rate of return falls from r to (1-t)r.With any change in r, can always consume endowment point (I0,I1).Budget constraint rotates around this point, with the absolute value of the slope decreasing.34SavingIn Figure 16.9, new budget constraint is PQ

24、.As illustrated, cannot choose point E1, but instead choose point Et.In this example, saving decreases.35Figure 16.9.36SavingThis is not the only possibility, however.In Figure 16.10, new budget constraint is still PQ.In this case, saving increases.Ambiguity arises because, on the one hand, taxing i

25、nterest reduces the opportunity cost of present consumption (substitution effect). On the other hand, taxing interest makes it more difficult to achieve any future consumption goal (income effect).37Figure 16.10.38SavingCase II: Interest earnings are taxable, and interest payments are not deductible

26、Can still consume endowment point (I0,I1).Saving is still penalized (as in the previous two figures), but borrowing is not rewarded.Kinked budget constraint PAM.39Figure 16.11.40Housing DecisionsTax code favors housing consumption in several ways.Suppose a homeowner decides to rent out his house:Rec

27、eives net rental payments of R (net of operating expenses)Mortgage interest payments MI (business expense)House may increase in value V.41Housing DecisionsNet income as a landlord is therefore:Rnet=R-MI+VAn owner-occupier receives an imputed rent R (the benefit of living in the house), still pays ma

28、intenance expenses and mortgage interest, and receives capital gains.42Housing DecisionsThus, the owner-occupier receives the same income flow as the landlord and, under the Haig-Simons principle, should pay the same tax.Under U.S. tax law, the implicit rent R is untaxed for homeowners, and the capital gain V is usually untaxed, too.43Housing DecisionsImplicit subsidy increases demand for housing, with elasticities around -1.0.44Po