'LVFXVVLRQ 3DSHUV 1R 6HSWHPEHU 6WDWLVWLFV 1RUZD\ 5HVHDUFK 'HSDUWPHQW 7KRU 2 7KRUHVHQ DQG .DUO 2YH $DUEX,QFRPH 5HVSRQVHV WR 7D[ &KDQJHV ± (YLGHQFH IURP WKH 1RUZHJLDQ 7D[ 5HIRUP $EVWUDFW Several studies, conducted on U.S. data, have found rather strong income responses to changes in marginal tax rates, when treating tax reforms as "natural experiments" and applying the differencesof-differences estimator on individual income data. The Norwegian tax reform of 1992 implied substantial increases in the net-of-tax rate (1 minus the change in the marginal tax rate) for highincome earners, and this paper provides measures of the elasticity of taxable income with respect to these tax rate changes. The natural experiment assumption of the differences-of-differences approach is discussed. Since the tax reform implied other tax changes and both demographic variables and shifting macroeconomic conditions might impact on income growth, we include other explanatory variables in addition to the net-of-tax rate changes. When including other explanatory variables, tax elasticity estimates are affected, but only modestly. Our estimates of the elasticity of taxable income due to changes in the marginal net-of-tax rate range from about -0
This series consists of papers with limited circulation, intended to stimulate discussion.
In Scandinavia, the provision of health care services has been, almost entirely, the responsibility of the public health care system. However, in the last five to seven years there has been remarkable growth in the private health care market. These health care services are obtained normally through insurance contracts. In this paper, I seek explanations for this phenomenon, using data from Norway. First, using available market data, I document that the market for private treatment insurance-often labelled as "jump the treatment queue insurance"-is growing rapidly. Thereafter, I present a theoretical model that identifies primary drivers for individual demand for treatment insurance. The third step is to analyse a unique survey data set that is combined with aggregate county data on treatment queues. The overall results indicate that public waiting lists affect the demand for privately bought insurance, while employer-provided insurance does not seem to be affected. I find strong preference for this type of insurance among smokers and the self-employed. Moreover, income is an important determinant of insurance demand.
Many corporations do not claim all of their allowable tax depreciation deductions. Intuitively, this kind of behavior might seem odd. However we propose several possible explanations. First, we find strong evidence that firms facing current tax losses or carrying forward past losses underutilize depreciation in order to recover tax losses before they expire. Second, corporations with bad economic performance tend to underutilize their deductions, suggesting that corporations use costly "windowdressing" on their accounting measures. Third, we find support for the hypothesis that tax compliance costs discourage the utilization of accelerated depreciation, especially by small firms. We do not find much support for other hypotheses. For example, we find no evidence of substitution between tax depreciation and private debt due to competition between the benefits of private bank monitoring and the tax savings from using tax allowances to postpone tax payments, as suggested in earlier literature. We also study the effects of the uniform reporting accounting system (typical of many European countries) which can, under certain circumstances, constrain dividends. Forgoing some tax depreciation can loosen the dividend constraint, but the evidence does not support this motivation. Unusual access to extremely detailed individual firm tax return forms in Norway made our empirical analysis possible. In addition, the 1992 Norwegian tax reform provided a natural experiment for testing some of the hypotheses. We use the time-series and cross-sectional variation across
Using survey data and the instrument developed by Barsky et al. (1997), we estimate the distribution of attitudes towards income risk in a country where many employment and health-related risks are generously covered by a tax …nanced social insurance system (Norway 2006) . Under a CRRA assumption, the sample average for the coe¢ cient of relative risk aversion is 3.8 with a standard deviation of 2.3. This number is then contrasted to that for …ve other OECD countries where risk attitudes have been measured using the same instrument and also prior to the …nancial crisis: Chile, France, Italy, The Netherlands and the US. When we relate this distribution for stated relative risk aversion to that for generosity of social insurance and the risks related to employment and health expenditure, a picture emerges suggesting that more extensive welfare states induce higher risk tolerance for foreground risks-a relationship that is in line with the theory on risk vulnerability.JEL classi…cation D12; D81
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