Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 3 of 3
Full-Text Articles in Business
Corporate Taxes And Union Wages In The United States, Alison R. Felix, James R. Hines Jr.
Corporate Taxes And Union Wages In The United States, Alison R. Felix, James R. Hines Jr.
Articles
This paper evaluates the effect of U.S. state corporate income taxes on union wage premiums. American workers who belong to unions are paid more than their non-union counterparts, and this difference is greater in low-tax locations, possibly reflecting that unions and employers share tax savings associated with low tax rates. In 2000 the difference between average union and non-union hourly wages was $1.88 greater in states with corporate tax rates below four percent than in states with tax rates of nine percent and above. Controlling for observable worker characteristics, a one percent lower state tax rate was associated with a …
Certain Effects Of Random Taxes, James R. Hines Jr., Michael J. Keen
Certain Effects Of Random Taxes, James R. Hines Jr., Michael J. Keen
Articles
This paper explores the implications of tax rate randomness, identifying circumstances in which revenue-neutral rate variability increases profitability, economic activity, and the efficiency of resource allocation. Furthermore, with heterogeneous taxpayers, tax rate variability is shown to perform an efficiency-enhancing screening function, imposing heavier expected tax burdens on less responsive taxpayers. And while efficient tax randomness enables governments to reduce average costs of taxation, it necessarily increases the marginal cost of taxation over some ranges of expected revenue, so may reduce efficient levels of government spending.
Investment Ramifications Of Distortionary Tax Subsidies, James R. Hines Jr., Jongsang Park
Investment Ramifications Of Distortionary Tax Subsidies, James R. Hines Jr., Jongsang Park
Articles
This paper examines the investment effects of tax subsidies for which some assets and not others are eligible. Distortionary tax subsidies concentrate investments in tax-favored assets, thereby reducing the expected pre-tax profitability of investment and reducing payoffs to bondholders in the event of default. Anticipation of asset substitution encourages lenders to require covenants in debt contracts, which only imperfectly address asset substitution and distort investment. The result is that borrowing is made more expensive, which in turn discourages investment. Borrowing rates can react so strongly that aggregate investment may rise very little, or even fall, in response to higher tax …