Archives

  • 2018-07
  • 2018-10
  • 2018-11
  • 2019-04
  • 2019-05
  • 2019-06
  • 2019-07
  • 2019-08
  • 2019-09
  • 2019-10
  • 2019-11
  • 2019-12
  • 2020-01
  • 2020-02
  • 2020-03
  • 2020-04
  • 2020-05
  • 2020-06
  • 2020-07
  • 2020-08
  • 2020-09
  • 2020-10
  • 2020-11
  • 2020-12
  • 2021-01
  • 2021-02
  • 2021-03
  • 2021-04
  • 2021-05
  • 2021-06
  • 2021-07
  • 2021-08
  • 2021-09
  • 2021-10
  • 2021-11
  • 2021-12
  • 2022-01
  • 2022-02
  • 2022-03
  • 2022-04
  • 2022-05
  • 2022-06
  • 2022-07
  • 2022-08
  • 2022-09
  • 2022-10
  • 2022-11
  • 2022-12
  • 2023-01
  • 2023-02
  • 2023-03
  • 2023-04
  • 2023-05
  • 2023-06
  • 2023-08
  • 2023-09
  • 2023-10
  • 2023-11
  • 2023-12
  • 2024-01
  • 2024-02
  • 2024-03
  • 2024-04
  • 2024-05

    • Prescott looks at the tax burden and the trade

    2018-10-26

    Prescott (2002) looks at the tax burden and the trade-off between consumption and leisure. In his study, he Biotin-tyramide compares the productivity per worker in the USA and France, concluding that the differences between consumption taxes and labor taxes have a big impact on productivity per worker in these countries. Using data of the World War II, McGrattan (McGrattan and Ohanian, 2008) examined the predictive power of neoclassical models to study the economic effects of fiscal shocks. Their model was able to estimate real GDP, investment, consumption, labor supply, capital and labor income, close to the empirical values of the World War II period. A pioneering study applied to the Brazilian economy was proposed by Araújo and Ferreira (1999). They analyzed the economic effects of the fiscal policy changes that were discussed in Brazil between 1995 and 1997. They focused on a tax change that reduced taxes on labor and capital, while increasing the taxation on consumption. The results show an increase of product, employment, capital stock and household welfare. Paes and Bugarin (2006) analyzed the economic effects of two tax reforms on the Brazilian economy. In the first tax change, the authors proposed the end of the cumulativity of PIS/COFINS and the transfer of half of the employer payroll tax to a new contribution on value added. In the second tax change, the social contribution on added value (CSVA) was suggested, replacing the ICMS, as well as a new excise tax replacing the IPI. In the long term, the reforms led to the increase of output, consumption, employment, capital stock, and welfare, but when the transition periods were considered, these gains were reduced significantly. Following a neoclassical approach, Cavalcanti (2008) analyzed the allocative and welfare impacts of a tax change that replaces payroll taxes by a tax on the firms’ revenues. The results implied negative effects on welfare and capital stock, with an increase of employment in the long-term. Bitencourt and Teixeira (2008) proposed a multi sectoral model to simulate competitiveness impacts arising from payroll and labor taxes cuts. The results show a small decline on wages, increase in capital stock, investments and exports, favoring the domestic market. Paes (2011) constructed a neoclassical model with 55 firms to simulate the economic effects of substituting all consumption taxes in Brazil by a value-added tax, with only one exemption to essential goods. The results indicated a slight expansion in the output, consumption, employment and investment, with small loss in government revenue and also with welfare\'s growth. In addition, industrial sectors have benefited in expense of the services sector. The author also estimated the effects of replacing the payroll tax only to industrial sector by an 20% elevation in COFINS for all sectors (Paes, 2012). The results lead to a massive growth in employment and industrial products, with a small decline in agriculture and services. This paper provides a new research approach for the Brazilian economic literature on the impacts of tax changes in payroll taxes by introducing two types of firms: labor-intensive and capital-intensive. Only the first has its payroll tax replaced by a revenue tax, while the second has not tax changes. In ribosomal subunits sense, we have proposed a modified version of the model used by Paes (2011, 2012).
    The macroeconomic model
    Calibration
    Simulation results The reforms are characterized by the replacement of payroll tax rate of the labor-intensive sector by a tax on its revenue. The first simulation (reform 1) establishes a tax rate of 1% on its revenue, the second simulation (reform 2) proposes a tax rate of 2% on its revenue. The third reform is neutral with respect to government revenue in the first steady state, with a tax rate of 4.7%, i.e., . In the final simulation, the tax change was made only in the payroll tax of the labor-intensive sector. In this sense, we chose a payroll tax rate that leads to the same fall in government revenue of reform 1, which is less than the level calibrated in Section 4. In all analysis, we fixed the government spending at the level calibrated in Section 4, so that, any fall in government revenues is fully financed with government transfers.