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Modern Fiscal Issues

Modern Fiscal Issues: Essays in Honour of Carl S. Shoup

Richard M. Bird
John G. Head
Series: Heritage
Copyright Date: 1972
Pages: 352
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  • Book Info
    Modern Fiscal Issues
    Book Description:

    This collection of essays covers the range of modern thinking on public finance from theoretical concepts such as public goods to eminently practical fiscal issues like value added tax.

    eISBN: 978-1-4426-3198-4
    Subjects: Finance, Economics

Table of Contents

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  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Preface
    (pp. vii-viii)
  4. Contributors
    (pp. ix-x)

    • 1 Public goods: the polar case
      (pp. 3-17)
      JOHN G. HEAD

      One of the most remarkable features of the modern fiscal literature has been the increasing attention devoted to a normative theory of public expenditure based on the concept of a public good. The theory of public goods was first developed and debated in the Continental public finance literature of the late 19th century. The modern discussion dates, however, from the appearance of Samuelson’s three pioneering papers in the mid-1950s [15-17] and Musgrave’sTheory of Public Financein 1959 [11]. These contributions have served both to revive interest in the older literature and to spark a number of lively controversies and...

    • 2 Joint production, externality, and public goods
      (pp. 18-44)

      The apparent similarities between the concepts of joint production, externality, and public goods have long been alluded to by many economists. But a systematic analysis of their interrelations had to wait until Professor Shoup’s contribution of 1965 [15]¹. His lead was then quickly followed by a succession of papers contributed by other leading figures in the field, namely, those by Professors Buchanan [1] and Samuelson [11].

      This paper will deal with essentially the same problems that have preoccupied predecessors in the area. It does not, however, profess to be a summary of the preceding studies, in which the discussion generally...

    • 3 The design of governments
      (pp. 45-62)

      The design of government decision-making units is today a problem of great theoretical and practical interest. The political ferment in many urban areas, the apparent inability of many traditional units of state and provincial government to cope with their changing environment, and the increased economic interdependence of nation-states have called into question the relevance in today’s world of the scope and division of powers of governments at all levels. At the same time as these practical problems crowd upon us, however, it appears to many that certain new developments in economic and political theory ought to provide a useful guide...

    • 4 Inter-nation equity
      (pp. 63-85)

      The issue of tax equity in a unitary fiscal setting is relatively simple. Only equity among individuals has to be considered and that in terms of a single tax system. The situation is more complicated in a multiple-unit system, whether composed of member states within a nation or a group of nations. Since the various units are engaged in trade, involving product as well as factor flows, the question arises how should such inter-state or international transactions be taxed? This complicates realization of equity among individuals and creates the additional problem of equity among states and nations.¹ Our concern here...

    • 5 Customs unions, tax unions, development unions
      (pp. 86-104)

      The theory of customs unions has, except for some recent qualifications, been expounded for groups of developed countries [19,20, 32]; similarly, the theory of tax unions. The aim of the first two sections of this paper is to extend and qualify such theory for groups of less-developed countries. As one does so, the more the lines between trade policy, tax policy, and general development policy for such a group become vaguer and less legitimate. It may be best, therefore, to give up most of the old notions and concepts used for developed countries and work towards a theory of development...

    • 6 Tax neutrality of instantaneous versus economic depreciation
      (pp. 105-116)

      A useful point of departure for this paper is provided by the following quotations regarding the neutrality of tax-allowed depreciation:¹

      Fundamental theorem of tax-rate invariance: If and only if true loss of economic value is permitted as a tax deductible depreciation expense will the present discounted value of a cash-receipt stream be independent of the rate of tax (Samuelson [4, p. 604]).

      The effect on investment incentives of a proportional tax levied only on business income can be neutralized (a) if the amount expended on durable goods can be deducted from taxable income in the year when made and (b)...

    • 7 Cumulative averaging after thirty years
      (pp. 117-134)

      It is perhaps peculiarly fitting that an article on cumulative averaging should be included in this volume, since it was largely as a result of discussions between Carl Shoup and myself, back in the summer of 1938, over possible methods of taxing capital gains, that the concept of cumulative averaging developed. As we devised and rejected one scheme after another, either on grounds of what then seemed to be intolerable administrative complexity or on grounds that under some circumstances capricious results would occur that would have unacceptable incentive effects, the idea emerged that ideally, at least, the method of taxation...


    • 8 Government revenue, the national income, and all that
      (pp. 137-163)
      A. R. PREST

      It has become a popular pastime in recent years to make comparisons of country tax efforts on a time series or cross-section basis. One example is the comments which usually appear in one place or another after the annual OECD national accounts data are published.¹ Typically, international comparisons are made between the over-all level of taxation and GNP, and between the proportions of total taxation contributed by taxes on income, taxes on expenditure, and social security contributions in each country. Another example is the series of papers which has appeared in recent years on tax revenue/GNP ratios in developing countries...

    • 9 Scale and effectiveness of urban government: a commentary
      (pp. 164-186)

      The deep troubles of American large cities — for example, the inability of urban governments to cope with demands on them, the mounting political desperation of their finances, civil disorders, and the downward trends of many social indicators — have prompted a host of proposals for reshaping urban government. The proposals are variously intended to raise efficiency and improve services, give more power to the less powerful, allow a greater range of choice, promote tax equity, and so on.

      This paper will comment on some of the public finance aspects of proposals designed to affect the scale and performance of urban government....

    • 10 Environmental quality, the market, and public finance
      (pp. 187-224)

      From an inauspicious beginning in the late 1940s with the Water Pollution Control Act of 1948, interest in environmental quality has grown at what appears to be an exponential rate, until today it ranks as one of the problems receiving the most attention by Americans. The problem is actually of world-wide significance,¹ but interest appears to be the greatest in this country. Further, the term is a broader umbrella than is generally realized, and the means for meeting it are both older and newer than we might expect.

      This paper attempts to define environmental quality and to describe those features...

    • 11 The German Stabilization Law: a new experiment
      (pp. 225-246)

      About three years ago, the German ‘Gesetz zur Forderung der Stabilitat und des Wachstums der Wirtschaft’ of June 8, 1967, came into force. This is too short a period on which to base a final judgment as to which of its rules (if any) have proved to be valid, and which of them have been inappropriate or inefficient. However, it seems to me that a preliminary reckoning is possible. For this purpose we must particularly examine whether questionable fiscal measures of recent origin can be traced back either to gaps or weaknesses in the Stabilization Law, or to the fact...

    • 12 The logical approach of the new estate duty in Great Britain
      (pp. 247-256)

      Taxes on death divide into two main types: (1) estate taxes on what the deceased individual leaves behind at his death, and (2) inheritance taxes on the benefits received by his heirs as a result of the death. The logical basis of the first type is that it represents a delayed wealth tax which conveniently taxes the wealth of the deceased at progressive rates at a time when he can no longer use it and when it is administratively convenient for the government and his executors to ascertain and calculate the tax. The second type treats the benefit received by...

    • 13 Ecuador’s value added tax: the first in the Andean Common Market
      (pp. 257-277)

      This paper combines a discussion of the Andean Common Market with an analysis of the value added tax of one of its member states. The Andean Common Market appears to have given little thought to the harmonization of its national tax systems. But if it succeeds in accelerating the economic development of the sub-region, the problems of uncoordinated tax systems may become apparent. The European Common Market’s carefully considered emphasis on value added taxation has resulted in the association of this tax with economic integration in much of the public finance literature. Ecuador has had a value added tax since...

    • 14 Technical assistance in taxation in developing countries
      (pp. 278-291)

      Carl Shoup began providing tax technical assistance to developing countries in 1932, when he worked in Cuba with E.R.A. Seligman [18]. His most recent aid has been to Liberia in 1969 [20]. His publications dominate the field of tax technical assistance; the books on Japan [23], and Venezuela [24], are still two of the most important and best documented works available.¹ Also noteworthy is his recent slim volume on Brazil [19].²

      Several characteristics of his approach to the problem of giving technical assistance help to account for the continued use and high repute of the reports on Japan and Venezuela....

    • 15 Property taxation
      (pp. 292-317)

      When Carl Shoup began his career in public finance in the 1920s, the property tax in the United States was approximately $40 per person ($87 in 1970 figures). In 1971 the figure will be almost twice as high. In the late twenties property taxation wastherevenue source in the United States. Income taxes were ‘low,’ although for some people and businesses already high enough to be a matter of more than slight concern. Estate and inheritance taxes were modest by present standards, yielded only slight revenue, and affected very few people. Retail sales taxes as we know them now...

    • 16 The evolution of sales taxation, 1915-1972
      (pp. 318-344)
      JOHN F. DUE

      In the fifty-five year period from 1917 to 1972 sales taxation¹ has grown from obscurity to a major revenue source throughout most of the world, despite the unsavory reputation that the tax has enjoyed among both academicians and many groups in society. Carl Shoup has never regarded sales taxation as anything but a second best approach to taxation. But several of his most significant contributions to the field of public finance have been in the sales tax field, in analysis of the tax under various circumstances and as a proponent of reform of sales tax structures. His interest in the...

  7. Bibliography: works of Carl S. Shoup
    (pp. 345-351)