Craig Brett

An assessment of the total external costs of UK agriculture

This trans-disciplinary study assesses total external environmental and health costs of modern agriculture in the UK. A wide range of datasets have been analysed to assess cost distribution across sectors. We calculate the annual total external costs of UK agriculture in 1996 to be £2343 m (range for 1990‐1996: £1149‐3907 m), equivalent to £208/ha of arable and permanent pasture. Significant costs arise from contamination of drinking water with pesticides (£120 m/year), nitrate (£16 m), Cryptosporidium (£23 m) and phosphate and soil (£55 m), from damage to wildlife, habitats, hedgerows and drystone walls (£125 m), from emissions of gases (£1113 m), from soil erosion and organic carbon losses (£106 m), from food poisoning (£169 m), and from bovine spongiform encephalopathy (BSE) (£607 m). This study has only estimated those externalities that give rise to financial costs, and so is likely to underestimate the total negative impacts of modern agriculture. These data help to identify policy priorities, particularly over the most eAcient way to internalise these external costs into prices. This would imply a redirection of public subsidies towards encouraging those positive externalities under-provided in the market place, combined with a mix of advisory and institutional mechanisms, regulatory and legal measures, and economic instruments to correct negative

The determinants of municipal tax rates in British Columbia

In this paper we study the regional pattern of municipal business property tax rates in the province of British Columbia. Reduced-form tax-setting equations produce some evidence that municipal governments respond to tax changes in neighbouring jurisdictions. A joint investigation of the determinants of tax base and municipal taxation decisions, however, reveals that it is difficult to interpret this response as arising primarily out of competition over tax base. There is also some evidence that municipal tax rates are sensitive to taxes set on the same base by super-municipal bodies.

Political uncertainty and the earmarking of environmental taxes

Abstract Far from being used to secure a ‘double dividend’ by reducing distorting taxes, revenues from environmental taxes seem quite often to be earmarked to particular spending programs. In the US, for example, a range of such taxes feed into environmental trust funds. Such earmarking runs counter to standard notions of good practice in taxing and spending. This paper develops and explores an explanation of such apparent inefficiencies in terms of political uncertainty: roughly, a green incumbent may chose to earmark revenues if the efficiency loss from doing so is outweighed by the value of constraining subsequent and potentially non-green policy-makers from ‘wasting’ the funds raised. It emerges, for example, that those most likely to earmark are green politicians who are politically weak, and that earmarking then enables such a policy-maker to set the corrective tax higher than they otherwise would but nevertheless lower than the Pigovian tax.

Those Taxes are all over the Map! A Test for Spatial Independence of Municipal Tax Rates in British Columbia

A test for spatial independence based on characteristic functions is introduced. The test is shown to be consistent against a fairly general class of alternatives, and the asymptotic distribution of the test statistic is determined. The test is then put to use in analyzing the spatial pattern of municipal property tax rates for the province of British Columbia. Results of the new test are compared with those of Morans test on this data set. Some intriguing differences are found.

Tax reform and collective family decision-making

Abstract Traditional analysis of tax reform treats market behaviour as arising out of individual utility maximisation. In this paper, behaviour is modelled as the Pareto-efficient outcome of a family decision process. Conditions for the existence of a feasible, Pareto-improving tax change are presented and contrasted with those that obtain in the individualistic case. The consequences of treating households as a single individual are also discussed.

Strategic nonlinear income tax competition with perfect labor mobility

Tax competition between two governments who choose nonlinear income tax schedules to maximize the average utility of its residents when skills are unobservable and labor is perfectly mobile is examined. We show that there are no Nash equilibria in which there is a skill type that pays positive taxes to one country and whose utility is larger than the average utility in the other country or in which the lowest skilled are subsidized. We also show that it is possible for the most highly skilled to receive a net transfer funded by taxes on lower skilled individuals in equilibrium. These findings confirm the race-to-the-bottom thesis in this setting.

Workforce or workfare

This article explores the use of workfare as part of an optimal tax mix when labor supply responses are along the extensive margin. Particular attention is paid to the interaction between workfare and an earned income tax credit, two policies that are designed to provide additional incentives for individuals to enter the labor force. This article shows that, despite their common goal, these policies are often at odds with each other.

Fiscal Federalism Revisited

Abstract We analyze how constitutional restrictions on tax bases within a federation affect the nature of Pareto-improving directions of tax reform and the design of optimal federal taxes. We show that constraints on federal taxation entail production inefficiency at the optimum, except under very restrictive circumstances. In passing, we show that using consumer prices as control variables—a standard procedure in tax-reform analysis—rather than the taxes themselves, leads to incorrect conclusions when not all taxes or prices can be controlled. Journal of Economic Literature Classification Numbers: D61, H21, H70.

PUBLIC GOOD PROVISION AND THE COMPARATIVE STATICS OF OPTIMAL NONLINEAR INCOME TAXATION

Comparative static properties of the solution to an optimal nonlinear income tax problem are provided for a model in which the government both designs an income tax schedule for redistributive purposes and provides a public good optimally. There are two types of individuals, distinguished by their skill levels, who have the same quasilinear preferences for labor supply and the consumption of a private and a public good. Comparative statics are obtained for the weights in a weighted utilitarian social welfare function, the prices of the two goods, a taste parameter that measures the onerousness of working, and the skill levels.

Voting over selfishly optimal nonlinear income tax schedules

Majority voting over selfishly optimal nonlinear income tax schedules proposed by a continuum of individuals who have quasilinear-in-consumption preferences is considered. Roell (2012) has shown that individual preferences over these schedules are single-peaked. In this article, a complete characterization of selfishly optimal schedules is provided. Each selfishly optimal schedule has a bunching region in a neighborhood of the proposers skill type, coincides with the maxi-max schedule below this region, and coincides with the maxi-min schedule above it. Using techniques introduced by Vincent and Mason (1967), the bunching region is identified by solving an unconstrained optimization problem. Information about the optimal schedules is used to provide a relatively simple proof of single-peakedness. The Condorcet-winning tax schedule features marginal tax rates that are negative (resp. positive) on the maxi-max (resp. maxi-min) part of the schedule except at the endpoints of the skill distribution where they are zero.