"This article reports the results of a set of experiments designed to examine whether a taste for fairness affects people's preferred tax structure. Using the Fehr and Schmidt model, we devise a simple test for the presence of social preferences in voting for alternative tax structures. The experimental results show that individuals demonstrate concern for their own payoff and inequality aversion in choosing between alternative tax structures. However, concern for redistribution decreases as the deadweight loss from progressive taxation increases. Our findings have important implications for tax policy design." ("JEL" C92, D63, H21, H23) Copyright 2007 Western Economic Association International.
In this paper we show that both music composition and brain function, as revealed by the electroencephalogram ͑EEG͒ analysis, are renewal non-Poisson processes living in the nonergodic dominion. To reach this important conclusion we process the data with the minimum spanning tree method, so as to detect significant events, thereby building a sequence of times, which is the time series to analyze. Then we show that in both cases, EEG and music composition, these significant events are the signature of a non-Poisson renewal process. This conclusion is reached using a technique of statistical analysis recently developed by our group, the aging experiment ͑AE͒. First, we find that in both cases the distances between two consecutive events are described by nonexponential histograms, thereby proving the non-Poisson nature of these processes. The corresponding survival probabilities ⌿͑t͒ are well fitted by stretched exponentials ͓⌿͑t͒ ϰ exp (−͑␥t͒ ␣ ), with 0.5Ͻ ␣ Ͻ 1.͔ The second step rests on the adoption of AE, which shows that these are renewal processes. We show that the stretched exponential, due to its renewal character, is the emerging tip of an iceberg, whose underwater part has slow tails with an inverse power law structure with power index =1+␣. Adopting the AE procedure we find that both EEG and music composition yield Ͻ 2. On the basis of the recently discovered complexity matching effect, according to which a complex system S with S Ͻ 2 responds only to a complex driving signal P with P ഛ S , we conclude that the results of our analysis may explain the influence of music on the human brain.
This paper investigates the effect of entrepreneurs' personal income tax situations on the growth rates of their enterprises. We analyze the personal income tax returns of a large number of sole proprietors before and after the Tax Reform Act of 1986 and determine how the substantial reductions in marginal tax rates associated with that law affected the growth of their firms as measured by gross receipts. We find that individual income taxes exert a statistically and quantitatively significant influence on firm growth rates. Raising the sole proprietor's tax price (one minus the marginal tax rate) by 10 percent increases receipts by about 8.4 percent.This finding is consistent with the view that raising income tax rates discourages the growth of small businesses.
In this paper, we examine the theoretical and empirical implications of accounting for multiple modes of tax evasion. We fi nd that increasing the probability of detection in a given mode has an ambiguous effect on compliance in the targeted mode as well as the untargeted mode. In order to gain greater insight into taxpayer behavior, we use the 1985 TCMP to estimate an empirical model with two modes of evasion. We fi nd that increased enforcement effort has a positive effect on compliance in the targeted mode, a negative effect in the untargeted mode, and a positive overall effect on tax compliance.
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