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PUBLICATIONS
PUBLICATIONS
Risky Business: Policy Uncertainty, Firm Valuation, and Investment
with B. Glass
International Tax and Public Finance, 2023
We generalize previous results on the effect of non-linear taxation on investment, showing that investment decisions are distorted when tax rates are correlated with marginal productivity. We demonstrate this result in a simple theoretical framework, which can also explain some well known results on the effects of tax progressivity and tax asymmetry on investment. Time-series estimates for the post-WW2 era suggest a negative correlation between effective tax rates and total factor productivity in the U.S., yielding an effect on firm investment equivalent to an investment subsidy of around 1 percent.
[PAPER]
PRESENTATIONS
University of Michigan PF Seminar
University of Tübingen RSIT Lunch Workshop
5th Mannheim Tax Conference
2020 Office of Tax Analysis Research Conference
FUNDING
Support from the E. Han Kim fellowship
Support from the European Research Council grant agreement No. 804104
Attending to Inattention: Identification of Deadweight Loss under Non-Salient Taxes
with B. Glass
Journal of Public Economic Theory, 2020
Recent developments in behavioral public economics have shown that heterogeneous biases prevent point identification of deadweight loss. We replicate this result for an arbitrary (closed) consumption set, whereas previous results on heterogeneous attention focused on binary choice. We find that one can bound the efficiency costs of taxation based on aggregate features of demand. When individuals have linear demand functions, the bounds for deadweight loss are easy to calculate from linear regressions.
[PAPER] [ONLINE APPENDIX]
PRESENTATIONS
110th Annual NTA Conference
2018 Quebec Political Economy Conference
University of Michigan Public Finance Seminar
University of Michigan Theory Seminar
University of Michigan Applied Microeconomics seminar
WORKING PAPERS
WORKING PAPERS
Previously circulated as "Does the Informal Sector Escape the VAT?"
This paper studies the price impacts of Value Added Tax (VAT) in the presence of size-based exemptions. In the Indian context, VAT is fully passed-through to consumers at registered firms, while its impact on unregistered firms varies. Consumers of unregistered firms in rural areas partially bear the burden of VAT, reducing progressivity. Output prices at unregistered firms are unaffected by input taxes, consistent with registration-based supply chain segregation. Additionally, a high registration threshold means VAT distorts product quality. We emphasize the significance of recognizing VAT's practical deviations from textbook models, particularly in developing countries, to understand its real-world implications.
[DRAFT]
PRESENTATIONS
7th Annual Mannheim Taxation Conference
5th Zurich Conference on Public Finance in Developing Countries
2021 CESifo Area Conference on Public Economics
ECOBUS online seminar
114th Annual NTA Conference
2022 Pacific Conference for Development Economics
OPFS Early Career Scholars Workshop
2022 ZEW Public Finance Conference
2022 Annual Congress of the IIPF
University of Oslo Staff Lunch Seminar
Norwegian School of Economics (NHH)
U.C. Irvine Brown Bag
University of Tübingen RSIT Lunch Workshop
Boğaziçi University
University of Southern California Applied Brownbag
Centre for European Economics Research (ZEW)
Oxford Centre for Business Taxation
UCSD Development Seminar
University of Mannheim Research Seminar in Public Economics
Bank of Lithuania
2024 Irish Public Economics Workshop
2024 Annual VfS Meeting
Media coverage: VoxDev
FUNDING
Support from the E. Han Kim fellowship
€2 Gas! Tax Holidays, Incidence Heterogeneity, and Market Structure
with L. Pessina and A. Tulli
Submitted
This study explores the impact of competition on the pass-through of a tax holiday prompted by the 2022 energy crisis on consumer prices. Italian gas stations (treatment group) and German/Spanish counterparts (controls) are the focus. Stations with fewer competitors pass on only 65% of the tax cut, compared to around 80% for those with more competition. Less competitive stations also exhibit greater pass-through variability, consistent with sustainable competitive and collusive equilibria. When same-brand stations are neighbors, facilitating collusive behavior, pass-through decreases for less competitive stations, but not for those with more rivals.
[DRAFT]
PRESENTATIONS
University of Tübingen RSIT Brown Bag seminar
2023 ZEW Public Finance conference
2023 NICEP conference
PIMES-UFPE
ECOBUS Reading Group
LMU Innovation Workshop
2023 Petralia Workshop
2023 Annual Congress of the IIPF
2023 WHY Symposyum
2023 SIEP conference
University of Colorado Boulder
2023 Annual NTA Conference
Tax Reform and the Valuation of Superstar Firms
Submitted
This paper measures the effect of the 2017 Tax Cuts and Jobs Act on share prices of publicly traded firms, finding that the most profitable firms, and those in concentrated industries, benefited the most. The tax bill significantly reduced corporate tax rates, thereby increasing share prices, particularly at the top. Among firms with the highest profit rates, about 65 percent rose in value upon the Senate's vote on the reform, whereas among less profitable firms, fewer than 15 percent appreciated. By many measures, stock market gains coincident with the tax bill were concentrated among firms with greater market power. This pattern is consistent with economic rents being important components of the values of large U.S. corporations.
[DRAFT]
PRESENTATIONS
University of Michigan Public Finance Seminar
University of Michigan Applied Microeconomics Seminar
the 75th Annual Congress of the IIPF
6th Mannheim Taxation Conference
University of Tübingen
University of Nebraska, Lincoln
Georgia State University
Joint Committee on Taxation
Bureau of Economic Analysis
University of Tübingen RSIT Lunch Seminar
FUNDING
Support from the E. Han Kim fellowship
Refunds are an essential feature of well-functioning VAT systems and take up a sizeable portion of government spending. In South Africa, refunds amount to 50 percent of gross VAT collection, representing a substantial transfer from the government to taxpayers that has to occur at relatively high frequency, often monthly. We show that delays in these refund payments reduce domestic investment, especially by small firms. We use administrative data to provide extensive evidence that firms respond to incentives created by delays and denials of refunds. We exploit a change in the attitude towards refunds of the South African Revenue Service (SARS) to quantify these effects. We find that approximately halving the audit rates of refund-claiming returns and speeding up their processing increased investment by 31 percent and output by 24 percent.
PRESENTATIONS
SA-TIED Work-in-progress workshop
South African Revenue Service
2023 Biennial Conference of the Economic Society of South Africa
2023 WIDER Development Conference
Interuniversity Research Centre on Local and Regional Finance (CIFREL)
University of Tübingen RSIT Brown Bag Seminar
FUNDING
SA-TIED Domestic Revenue Mobilization (UNU-WIDER, USD 10,000)
WORK IN PROGRESS
WORK IN PROGRESS
Guess Who's Evading on Dinner: Experimental Evidence on the Incidence of Tax Evasion
with A. Bohne and L. M. Giuffrida
While the general distributional incidence of taxes has been frequently studied in the literature, little is known about how the rents of tax evasion are split between consumers and producers. While some theoretical general-equilibrium models would predict factor prices adjust so that firm owners do not benefit from evasion in equilibrium, we have very limited empirical evidence, which so far has only been based on online surveys or imperfect natural experiments. We quantify the incidence of VAT evasion by conducting a survey-based face-to-face experiment with restaurants in Italy. Through a randomized treatment design, we elicit average price differentials of standardized menus by the method of payment in order to back out what portion of evaded taxes are passed on to consumers. Our findings are consistent with the entirety of the benefits of evasion being captured by producers, and even focusing on likely evaders does not yield any price difference on average. We show that when this is the case, there is additional scope for policies that incentivize consumers to act as tax informers.
PRESENTATIONS
ECOBUS Online Seminar
ZEW Hub Field Experiments Workshop
Ludwig Erhard ifo Research Seminar
University of Tübingen RSIT Brown Bag Seminar
University of Oslo
2024 Annual Congress of the IIPF
2024 Mannheim Taxation Conference
2024 NTA Annual Conference
FUNDING
Program for the Promotion of Junior Researchers (University of Tübingen, EUR 49,560)
RiSC Program (Baden-Württemberg Ministry of Arts and Sciences, EUR 49,860)
Leibniz ScienceCampus MannheimTaxation (ZEW and University of Mannheim, EUR 49,638)
DORMANT PROJECTS
DORMANT PROJECTS
The Engel Curve for Tax Preparation Services (with Y. Kaçamak, J.M. Payne, and E. Stuart)
A General Equilibrium Model of Real-Life Value-Added Taxation (with J. Slemrod)
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