Advertising is expensive and thus raises the cost of goods, but it may encourage competition that keeps prices down. This column addresses the old question with data from a natural experiment brought about by tax harmonisation in Austria. It argues that on average advertising decreases consumer prices and estimates that if the 5% tax were abolished, consumer prices would decrease by about 0.25 percentage points.
What has happened to marginal tax rates in the US? This column argues that marginal tax rates vary so much among different groups in the US that redistributive taxes have actually damaged and interfered with the incentives and make up of the workforce.
Many OECD countries suffer from high sovereign debts. Sooner or later, this problem must be addressed. Many argue that this will require some form of fiscal retrenchment or institutional reform or a combination of the two. This column argues that the two are not complements as many suggest – they are instead substitutes.
Income tax is always a controversial issue in the US, particularly in election year. But how progressive is the US income tax system? This column looks at data on over 100,000 taxpayers from the Internal Revenue Service 2000 Public Use Tax File. It finds the question has more than one answer.
Does a high income tax rate cause people to work less, work more, or continue unaffected? This is a question that divides politicians and the public. And, according to this column, it is also a question that economists do not know the answer to. It is time to say so.
Other Recent Articles:
- The alternatives to austerity: The effect on jobs and incomes in the UK
- Is a European Tobin tax likely to be efficient?
- The Darwin economy
- Taxing the 1%: Why the top tax rate could be over 80%
- Tax evasion: Why the crackdown comes at a cost
- Sovereign debt, government myopia, and the financial sector
- US budget fight: The role of tax expenditures?
- The Future of Banking – solving the current crisis while addressing long-term challenges
- Financial transaction tax: Feasible and desirable if done right
- Eurobonds are the wrong solution
- Financing fiscal stimulus
- Why banks are under-taxed and what to do about it
- Patent Boxes: An innovative way to race to the bottom?
- Taxing the rich: The case of Germany
- Another look at the 2001 income tax rebates
- EU corporate tax reform: Weighing the pros and cons
- Getting the right tax policy: Aiding recovery and boosting growth
- The “de-taxation” of overtime hours: Lessons from the French experiment
- The employment effects of enterprise zones: New evidence from France
- Tax competition vs. tax coordination: Revisiting the debate
- Fiscal consolidation: At what speed?Blanchard, Leigh
- Public debt and economic growth, one more timePanizza, Presbitero
- Escaping liquidity traps: Lessons from the UK’s 1930s escapeCrafts
- The lessons of the North Atlantic crisis for economic theory and policyStiglitz
- Do entrepreneurs matter?Becker, Hvide
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Debt, deleveraging, and the liquidity trap: A new modelKrugman
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Reichlin, Baldwin, 14 April 2013
CEPR Policy Research
- Political Credit Cycles: The Case of the Euro ZoneFernández-Villaverde, Garicano, Santos
- Winning by Losing: Incentive Incompatibility in Multiple QualifiersDagaev, Sonin
- Income and schoolingBrückner, Gradstein
- Monetary Policy and Rational Asset Price BubblesGalí
- Does Supporting Passenger Railways Reduce Road Traffic Externalities?Lalive, Luechinger, Schmutzler
- How the EZ crisis is permanently changing EU institutionsMicossi
- WTO 2.0: Global governance of supply-chain tradeBaldwin
- Is US economic growth over? Faltering innovation confronts the six headwindsGordon
- The economic crisis: How to stimulate economies without increasing public debtWood
- Austerity: Too Much of a Good Thing?Corsetti
- Global Spillovers and Economic Cycles30 - 31 May 2013 / Paris / Banque de France