Payroll Taxes: Thresholds, Firm Sizes, Dead-weight Losses and Commonwealth Grants Commission Funding
AbstractPayroll-tax thresholds make firms smaller than they would otherwise be and concentrate firms at just below threshold employment. We estimate the resulting dead-weight losses under perfect and monopolistic competition. Under monopolistic competition, the threshold-induced dead-weight loss in Victoria is approximately 10 per cent of payroll-tax collections over a wide range of threshold levels. Because payroll-tax design affects the size distribution of firms, it also affects the Commonwealth Grants Commission's assessment of a State's capacity to generate payroll taxes. This violates a principle of the Commonwealth Grants Commission that its grant to a State be independent of the State's policies. Copyright � 2004 Economic Society of Australia..
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Bibliographic InfoArticle provided by The Economic Society of Australia in its journal The Economic Record.
Volume (Year): 80 (2004)
Issue (Month): 250 (09)
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- Kazuki Onji, 2008.
"The Response of Firms to Eligibility Thresholds: Evidence from the Japanese Value-Added Tax,"
Asia Pacific Economic Papers
370, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
- Onji, Kazuki, 2009. "The response of firms to eligibility thresholds: Evidence from the Japanese value-added tax," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 766-775, June.
- Kazuki Onji, 2008. "The Response of Firms to Eligibility Thresholds : Evidence from the Japanese Value-Added Tax," Finance Working Papers 21965, East Asian Bureau of Economic Research.
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