Introduction to the special issue

International Tax and Public Finance (2019) 26:1231–1233 https://doi.org/10.1007/s10797-019-09582-5 EDITORIAL Introduction to the special issue Claus Thustrup Kreiner1 · Eva Mörk2 Published online: 6 November 2019 © Springer Science+Business Media, LLC, part of Springer Nature 2019 This special issue of International Tax and Public Finance consists of selected contributions from the 364 papers presented at the 74th Annual Congress of the International Institute of Public Finance (IIPF). The IIPF Congress was held on August 21–23, 2018, in Tampere, Finland. It was co-hosted by the Universities of Tampere and Turku, the VATT Institute for Economic Research and the Labour Institute for Economic Research. The theme of the conference was Impact of Public Policies on Labor Markets and Income Distribution. Four excellent plenary speakers discussed a variety of topics on this theme: Uta Schönberg (Professor, Department of Economics, University College London) on “The Impact of Immigration on Regions and Workers,” Henrik Kleven (Professor, Department of Economics & Woodrow Wilson School, Princeton University) on “Taxation and the Extensive Margin Reconsidered,” Petra Todd (Edward J. and Louise W. Kahn Term Professor of Economics, University of Pennsylvania) on “Incorporating Personality Traits Into Economic Models of Labor Supply, Education, and Occupational Choice,” and Gordon Dahl (Professor, Department of Economics, University of California, San Diego) on “Intergenerational Spillovers in Disability Insurance.” In addition, EconPol organized a special session on “Implications of US Tax Reform for Europe” with Michael Devereux (Oxford University Centre for Business Taxation), Clemens Fuest (ifo Institute and University of Munich), Michelle Hanlon (MIT, Sloan School of Management) and Victoria Perry (International Monetary Fund) on the podium, and Bank of Finland organized a special session on “Misallocation and Public Policy.” The ITAX award for best paper presented by a current PhD student was awarded to Juliana Londono-Velez of UCBerkeley for her work on wealth taxation in Colombia. Many of the papers presented at the conference fell under the theme of Impact of Public Policies on Labor Markets and Income Distribution, but—reflecting * Eva Mörk Claus Thustrup Kreiner 1 Center for Economic Behavior and Inequality (CEBI), Department of Economics, University of Copenhagen, Oster Farimagsgade 5, Building 26, 1353 Copenhagen K, Denmark 2 Department of Economics, Uppsala University, Box 513, 751 20 Uppsala, Sweden 13 Vol.:(0123456789) 1232 C. T. Kreiner, E. Mörk diverse research interests of the members of the IIPF—a great number of the papers also dealt with other research areas in public economics. This diversity of presented topics is reflected in the selection of the eight papers in this special issue. The article by Stefan Bach, Andreas Thiemann and Aline Zucco is about the empirical measurement of inequality. Many countries have to rely on survey data when measuring the degree of wealth inequality in society, but face the problem that the very wealthy are underrepresented in household surveys. The authors provide new evidence on the top tail of the wealth distribution in France, Germany and Spain by combining survey information with information about wealth of the very rich from the Forbes list and national rich lists. The share of wealth owned by the top one percent is considerably higher when including this additional information. Since 2013, the European Union has mandated EU Financial Institutions to disclose a so-called CbCR, which contains tax-related information of a firm on a percountry basis. The aim of the policy is to increase transparency and limit profit-shifting activities of multinational firms. Verena Dutt, Christopher Ludwig, Katharina Nicolay, Heiko Vay and Johannes Voget use an event-study design to analyze how investors react to the enactment of a CbCR requirement for EU financial institutions. The results suggest no response, which goes against the received perception of a negative effect. Also focusing on potential tax avoidance, Annette Alstadsæter, Wojciech Kopczuk and Kjetil Telle investigate how tax minimizing efforts spread within family networks. In 2005, a Norweigan tax reform made it beneficial for individual shareholders to transfer all their shares in a company to a newly founded corporation, given that this new holding company holds at least 10% of the shares of the transferred company. Utilizing the discontinuity at 10% together with detailed individual-level administrative data, the authors show that eligibility to set up a tax shelter within the family network increases the likelihood that an individual will himself transfer his shares to a new holding company. The paper thus provides concrete evidence of optimization frictions in the context of behavioral responses to taxation. Nicole Bosch, Egbert Jongen, Wouter Leenders and Jan Möhlmann study behavioral responses to kinks and notches in the Dutch cash transfer system. The existing studies of bunching focus mainly on kinks and notches in the tax system, while this paper focuses on kinks and notches in the budget set arising because of the phasing out of cash transfers with income and wealth. The authors find no significant evidence of bunching at these kinks and notches. The empirical findings indicate that the no bunching results are due to inattention and lack of salience. Policy makers may react to the inattention and lack of salience of potential benefit recipients by sending out information letters. Per Engström, Eskil Forsell, Johannes Hagen and Arnaldur Stefansson report results from a randomized field experiment where letters inform pensioners about the possibility of receiving housing allowance. The information letters had a large effect on the application rate and subsequent take-up rate of the pensioners. However, the rejection rate on the applications was also much higher among those receiving the information letter, emphasizing the need for careful design of information campaigns in situations with imprecise targeting. 13 Introduction to the special issue 1233 An effective way to stimulate the economy in a downturn is to give individuals financial incentives to advance purchases of durables. For example, Thailand offered a first-car tax rebate during 2011–12 with the aim of advancing car purchases. However, as shown by Athiphat Muthitacharoen, Krislert Samphantharak and Sommarat Chantarat such a policy may have adverse effects in the longer run because a significant share of those induced to buy durables get into financial trouble afterward. Direct elections might be one way to incentivize politicians to provide high-quality services for their constituency. In the German state of Brandenburg, the heads of local governments are elected in direct elections, but only if the candidate reaches a majority and is supported by at least 15% of all eligible voters. (...truncated)