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Purpose– Traditionally, the Laffer effect has been discussed in the context of endogenous growth models or in the case of the labor market with respect to willingness to supply more labor given a tax incentive on wages. The paper adopts an inductive approach to discuss it in the context of a product's market, say automobile industry in Turkey.Design/methodology/approach– The author revisits the ad valorem tax model on a product and investigates how the elasticities of demand and supply and the tax rate are related to the Laffer effect. The author considers a special case where demand curve is non-linear and the supply curve is completely elastic. This specific model fits the practical case where the Turkish government expected the auto sellers to pass fully the temporary partial tax concession onto the consumers during the global crisis in 2009.Findings– The author showed that the demand elasticitiy must be calculated neither at the intersection of the initial equilibrium nor that of the final equilibrium points, but somewhere else. The author defined a pass-through coefficient which was different from the classical burden of tax concept, calculating the degree of pass-through of a tax decrease from firms to consumers. Moreover, the author found a one-way relationship between the overall tax revenues of the government and a single sector.Research limitations/implications– The case of tax revenues where both the demand and supply curves are non-linear and non-extreme must be solved.Practical implications– The author showed that the government's dual expectation of both boosting the economy, increasing employment and raising its tax revenues can sometimes be consistent given a usual upward sloping supply curve. In the case of a perfectly elastic supply curve, the tax revenues can even be higher with a higher level of equilibrium quantity.Social implications– The Turkish government aiming to support the production and employment in this leading export industry, may have expected this temporary tax decrease to be passed completely onto the consumers by the producers. However, this did not happen as producers' prices to the consumers did not decrease as much as the amount of tax. This paper shows that the after tax elasticities and the current level of tax rate must have been compared.Originality/value– The author pointed out to the importance of being clear in explicitly indicating at which points the elasticities derived from some function (tax revenue function) of equilibria variables (price and quantity) must be interpreted. In this paper, doing many numerical calculations allowed us to notice the proper point of calculation of the demand elasticity, which is the after-tax price along the "no tax demand curve". Moreover, a pass-through coefficient is defined which is different from the classical burden of tax concept.

In this paper, we analyze government budget balance within a simple model of endogenous growth. For the AK model, simple analytical conditions for a tax cut to be self-financing can be derived. The critical variable is not the tax rate per se, but the ?transfer-adjusted? tax rate. We discuss some conceptual issues in dynamic revenue analysis, and we explain why previous studies have arrived at seemingly contradictory results. Finally, we perform an empirical study of the transfer-adjusted tax rates of the OECD countries to see which country has the highest potential for fiscal improvements; it turns out that only a few countries have any potential for such ?dynamic scoring?.

In this paper, we analyze government budget balance within a simple model of endogenous growth. For the AK model, simple analytical conditions for a tax cut to be self-financing can be derived. The critical variable is not the tax rate per se, but the "transfer-adjusted tax rate". We discuss some conceptual issues in dynamic revenue analysis, and we explain why previous studies have arrived at seemingly contradictory results. Finally, we perform an empirical study of the transfer-adjusted tax rates of the OECD countries to see which country has the highest potential for fiscal improvements; it turns out that only a few countries have any potential for such "dynamic scoring".

In this paper, we analyze government budget balance within a simple model of endogenous growth. For the AK model, simple analytical conditions for a tax cut to be self-financing can be derived. The critical variable is not the tax rate per se, but the transfer-adjusted tax rate. We discuss some conceptual issues in dynamic revenue analysis, and we explain why previous studies have arrived at seemingly contradictory results. Finally, we perform an empirical study of the transfer-adjusted tax rates of the OECD countries to see which country has the highest potential for fiscal improvements; it turns out that only a few countries have any potential for such dynamic scoring.

Purpose
The purpose of this paper is to study the effect of income and property taxes on property assets through the application of fair value accounting and deferred income tax standards.


Design/methodology/approach
This approach is based on the whole life costing model that accounts for the initial expenses, operation and maintenance costs, future revenues, and residual value.


Findings
Formulating a step-by-step accounting procedure based on fair valuation and temporary differences in taxation, this paper shows the existence of the Laffer curve and thus elucidates the economic effect of the taxes and fully discloses the asset's fair value. The optimal taxation rate is lower when a property tax and an income tax are both present, as the the marginal gain from both taxes is constantly decreasing, due to the changes in the fair value of the asset, and even has a negative effect in the case of the income tax.


Practical implications
Accounting techniques, which combine market-based assumptions, financial valuation techniques based on discounted fair value models, and standard International Financial Reporting Standards disclosures, prove to be an unbiased proxy for the optimal taxation rate.


Originality/value
This study demonstrates a practical tool for policy makers who are trying to define macroeconomic policies on property taxation. Moreover, this approach can be used as an evaluation model for individual investors who wish to measure the future prospects from a property investment under taxation uncertainties.

We introduce bureaucratic corruption in a simple way and examine its effect on government revenue when policies change. We show that a rise in the tax rate can lead to a fall in net revenue--a Laffer curve result due to the proportion of auditors that are corrupt and enforcement costs. It may pay for the government to lower audit probabilities and induce cheating. If corruption is low enough, revenues garnered from capturing people cheating may exceed those from choosing an audit structure in which everyone declares their true income. We also examine a case in which corruption is endogenous.

This thesis consists of three self-contained essays. Essay 1, "Dispatchers", is a study of a specialized service sector that has arisen in many developing countries. It is a well-established fact that the government bureaucracy in many developing countries is large, difficult to understand, non-transparent and time-consuming. However, "de jure" procedures sometimes have little to do with how firms or individuals actually go about when dealing with the government bureaucracy. One institution that has emerged is a specialized intermediary, henceforth called dispatcher, that assists individuals and firms in their contacts with the public sector. A model is developed to study the effects of dispatchers on time and resources spent in obtaining licenses, on informality and on the incentives of bureaucrats and dispatchers to make regulation more/less complicated. Essay 2, "Informal firms, investment incentives and formalization", studies informal firms in developing countries. In a typical developing country, the majority of small firms are informal and entry costs into formality are high. What can we expect in terms of firm investment, growth and formalization in such a setting? I show that investment and growth trajectories differ substantially between firms that choose to formalize and those that do not. The formalization decision depends non-trivially on the informal firm's productivity. This, in turn, has an effect on how policies should be designed. The long-run firm size distribution exhibits a "missing middle" and depends on the initial firm-level stock of capital, a result that can be interpreted as a poverty trap. Essay 3, "Compositional and dynamic Laffer effects in a model with constant returns to scale", studies dynamic effects of tax cuts. The possibility of tax cuts paying for themselves over time seems like an attractive option for policy makers. In a constant returns to scale model, I study conditions under which reductions in capital taxes are self-financing