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Overview and details of the sessions of this online conference.

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The last speaker of each session is the session chair. The discussant is always the following speaker, with the first speaker being the discussant of the last paper. Each paper has a 22-minutes-block in all sessions. There should be 15 minutes and no more than 18 minutes for the presenter. The discussion is then started by the discussant. Please note that the role of the discussant is different compared to previous years: The discussant has only 1-2 minutes and s/he is not allowed to give a lengthy summary of the paper together with comprehensive comments. Instead, her/his task is to raise one single question/comment and, in doing so, start the general discussion! All participants are asked to be strict in timing to allow people to change sessions during the general discussion. For a (rare) session with less papers in the session than the time slot allows, stick to the congress schedule and use 22 minutes per presentation to allow listeners to smoothly change between sessions.

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Please note that all times are shown in the time zone of the conference. The current conference time is: 2nd Dec 2021, 12:54:29pm GMT

 
 
Session Overview
Session
A03: Public Finance Theory
Time:
Wednesday, 18/Aug/2021:
10:45am - 12:15pm


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Presentations
10:45am - 11:07am

Tax Transparency and Social Welfare: The Role of Government Commitment

Chishio Furukawa

Yokohama National University, Japan

Although transparency has long been held as the key principle of taxation, recent behavioral public finance theory has shown that it may reduce social welfare as inattention can alleviate behavioral distortions. This paper extends this analysis for Ramsey taxation by modeling inattention as a noise in the tax rate signal received by Bayesian citizens. In equilibrium, we find that transparency will improve social welfare by ensuring the government's ability to commit to a fairly low tax rate that is socially optimal. Moreover, this model yields a new sufficient statistics formula. Based on typical estimates of attention parameters and marginal cost of public funds, this formula suggests that ensuring tax transparency is worth incurring approximately 10 percent of the revenue currently estimated for the U.S. tax system.

Furukawa-Tax Transparency and Social Welfare-301.pdf


11:07am - 11:30am

Supply of Segregation, Inequality and Welfare

Lisa Windsteiger

Max Planck Institute for Tax Law and Public Finance, Germany

Why is an increase in income inequality often accompanied by an increase in socio-economic segregation? And what are the welfare implications of this co-movement? This paper uses a theoretical model to analyze the relationship between income inequality and socio-economic segregation. It shows that rising inequality can trigger sorting according to income, as a monopolist’s profits from offering sorting increase with income inequality. It also examines the relationship between sorting and social welfare and shows that profit-maximizing sorting patterns are not necessarily optimal from a welfare perspective. In fact, for a broad field of income distributions (monopolist) profits increase with inequality, while at the same time total welfare from sorting decreases.

Windsteiger-Supply of Segregation, Inequality and Welfare-225.pdf


11:30am - 11:52am

The Effects of Numeracy, Overconfidence and Risk Aversion of the Aged and Their Implications to capital Income Tax Policy in Japan

Shigeki Kunieda

Chuo University, Japan

Using a new comprehensive internet survey of aged male and female respondents in Japan, we consider the relationship of numeracy, overconfidence, risk aversion and risk asset investment and its implications for capital income tax policy in Japan. Numeracy decreases with age after early 60s. Educated older men tend to be overconfident about their numeracy. Numeracy and overconfidence reduce absolute risk aversion. Individuals with higher numeracy, more overconfidence and higher education tend to have risk assets in their household portfolio.

With consideration to the decline of numeracy of the aged and possible excess risk taking due to overconfidence , it is not desirable to encourage risk asset investment of the aged by special preferred tax treatment in Japan.

Kunieda-The Effects of Numeracy, Overconfidence and Risk Aversion of the Aged and Their Implications-436.pdf


11:52am - 12:15pm

Redistribution, Distortion and Implementation: Unpacking the Optimal Two-Dimensional Tax Schedule

Kevin Spiritus1, Floris Zoutman2

1Erasmus University Rotterdam, The Netherlands; 2NHH Norwegian School of Economics, Norway

We analyze the optimal marginal excess burdens for the nonlinear taxation of two-dimensional incomes when households have multidimensional characteristics. We show that the optimal marginal excess burdens can be decomposed into two terms. The first component is a distributional characteristic for the income under consideration: the larger is the (negative) local covariance between the income and the welfare weights, the higher will be the optimal marginal excess burden. This component guarantees that the combination of marginal excess burdens is among the many to comply to the divergence equation found by Golosov et al. (2015). The second component guarantees that the combination of marginal excess burdens is the unique solution that can be implemented using a tax function. This term also captures the further distortions caused by the reform used to construct the distributional characteristic. We use simulations to show the relative importance of each term.

Spiritus-Redistribution, Distortion and Implementation-239.pdf


 
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