دانلود رایگان مقاله انگلیسی اصلاحات مالیاتی و اقتصاد سیاستی پایه مالیاتی - الزویر 2018

ABSTRACT

This paper studies the political prospects for reform in a model where the tax base and statutory rate are separate instruments of tax policy. The model suggests that large changes in the tax code may be easier to enact than marginal reforms. The tax base faces a tipping point where even the beneficiaries from tax exemptions support reform. At this tipping point, tax reform is Pareto improving. Politically feasible tax reform occurs when fiscal needs are large, but may nonetheless involve reductions in marginal tax rates. There is strategic complementarity in lobbying for tax exemptions, resulting in multiple equilibria. The model’s main predictions are consistent with recent tax reforms in OECD countries.

6. Concluding remarks

Determining the tax base is a highly political process. Reformers’ desire to bring about a simpler, more efficient, and “fairer” tax system is often stonewalled because of the distributional consequences of such change. This paper proposes a tractable model of the political economy of the tax base. When revenue needs are low, they can be met more easily with narrow tax bases. Special interests focus on securing parochial tax benefits, each of which has only minor implications for overall efficiency, but combined may bring significant dead-weight losses. But greater revenue needs are more costly to fund with a narrow tax base. Special interests become increasingly willing to forgo their own tax breaks in favor of efficiency as revenues increase. Eventually, tax reform is feasible.

At a first glance, it may appear that it would be easier to broaden the tax base through a divide-and-conquer strategy that takes on one special interest at a time. The model proposed here shows that tax exemptions to multiple groups are strategic complements. Special interests will invest greater resources in fighting reform when the tax base is narrow. Base-broadening tax reforms may therefore not be etching at the margin of the tax code, but a significant overhaul of the tax system. The general equilibrium benefits are small if only one special interest is confronted. But forging a grand bargain where a number of special interests are targeted simultaneously may improve efficiency sufficiently to compensate all losers.