Do Hidden Taxes Increase Welfare?

Galle, Brian D.

doi:10.2139/ssrn.1113585

Cited by 2 publications

(2 citation statements)

References 44 publications

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“…Finally, we explain why the inclusion of the difference between the local exercise tax rates and the neighboring tax rates would matter more than the sales price to examine the consumers’ behavior in the rational-addiction model. As Galle (2009, 2011) points out that the size of the consumers’ behavioral distortion is related to the size of the tax bills, the diminished awareness of the tax burdens should also diminish the distorted behaviors. In the theoretical implication, researchers suggest that taxpayers have different responses to taxes which are more or less noticeable, so it is reasonable for us to measure the behavioral effects of hidden taxes.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…Furthermore, the tax issues are still new to be verified in the analogy of rationality and bounded rationality. Galle (2009, 2011) explores the possibility that hidden taxes may in fact be more efficient than others. He attempts to integrate with the tax literature some recent developments in the understanding of bounded rationality in consumers more generally.…”

Section: Introductionmentioning

confidence: 99%

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Looking at the taxation effect on cross-state smuggling using rational addiction models

Swan

Sun²,

Floss³

2019

JES

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Purpose The purpose of this paper is to show how the taxation effect on cross-state smuggling can be a valid instrumental variable for lagged and future consumption together with the local price series. Design/methodology/approach On the same grounds, the authors raise the question using the rational-addiction model by noticing that the neighboring price differentials really capture the possible smuggling or bootlegging effects. Findings Moreover, the authors look into the extended model to test the key condition that the expected future financial consequences will affect the current consumptions. Originality/value This supports the rational-addiction model, which can be used to plan the taxation for the forward-looking consumptions.

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Section: Theoretical Frameworkmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%