Public Finance Review

Individuals with income not reported to the tax authority by a third party (e.g., the self-employed, those earning tips) may be less likely to be detected evading taxes relative to the case in which their income is subject to third-party reporting. However, their compliance responses—to changes in the proportion of income that is reported to the tax authority, to changes in audit and tax rates, etc.—are largely unknown, in part because of the difficulty in obtaining information on individual choices in these situations. The authors use experimental methods to examine individual income tax compliance in settings where individuals differ in the portion of their income that is ``matched'' (reported to the tax authority via third-party information) versus ``nonmatched'' (not fully reported to the tax authority). The results indicate that individuals who have relatively more nonmatched income exhibit significantly lower tax compliance rates than individuals who earn relatively less nonmatched income.

The implementation of tax reforms to reduce carbon dioxide (CO₂) emissions has become increasingly popular. Nevertheless before prescribing these measures, they should be subject to a cost-benefit analysis. This paper evaluates the effects, in Spain, of a rise in the excise duties on energy to a level equal to the average of the EU-15. To this end, a complete demand model, comprising four energy products and fourteen nonenergy products, is estimated. The results indicate that such a reform, despite the fact that it would reduce CO₂ emissions by 11 million tons per year, would produce efficiency costs of 15.88¢ for each euro collected, causing households an average annual welfare loss of 228. Moreover, the progressivity and redistributive capacity of Spanish indirect taxation would be also reduced. As a result, the private welfare loss arising from the reform would be approximately four times greater than its estimated social benefits.

There is a paucity of research evidence regarding the likely long-term economic consequences of firms' foreign tax credit (FTC) status on asset deployment between the United States and foreign locations. The existing literature primarily focuses on income, not asset, shifting with respect to FTC status. The authors empirically show that after allowing for adjustment costs through Tobin's quotient, assets shift in a direction opposite to the traditional income shift for U.S. multinational corporations with prolonged binding FTC limitation. Regression results for approximately 261 U.S. multinational corporations with various years of missing data for the 1997 through 2003 period indicate that the amount of foreign asset allotment is an increasing function of the duration of firms' FTC limitation spell (cumulative number of the sampled years the firm is FTC limited) for firms in or greater than equilibrium Tobin's quotient.

Some Georgia school systems award more HOPE scholarships than their academic achievement predicts, creating a geographically determined benefit that will be compounded into local real estate values. Using a two-stage regression methodology, we test to see if these scholarship ``over-awards'' are capitalized into local home prices. Our evidence supports the hypothesis. We argue that potential homeowners view HOPE eligibility percentages as an indicator of access to state resources, and this access is capitalized into home prices.

This article considers the relationship between ethnicity within the elderly population and education spending. Extensive literature analyzes the relationship between demographics and education spending. This article contributes to this literature by examining the dynamics between the elderly population and ethnicity and its impact on education finance. Using a national panel public school district data set, it is found that increased ethnic fragmentation within the elderly population is negatively related to per-pupil spending and to per-pupil local revenues, but this effect depends on whether the state has a court-ordered reform.