ECON 514 Spring 2013 Tax Policy in Emerging Markets (Q)

Taxes are half of what government does. So if you are interested in what government policy can do to promote efficiency, equity, and economic development, you should be interested in tax policy. Governments must raise tax revenue to finance critical public goods, address other market failures and distributional issues, and to avoid problems with debt and inflation. Taxes typically take up anywhere from ten to fifty percent of a country's income, they profoundly affect the incentives to undertake all varieties of economic activity, and the government expenditures that they finance have potentially large consequences for human welfare. So the stakes involved in improving tax policy are quite large. All of these issues are of great importance in developing and transitional countries (also known as "emerging markets"), but in these nations taxation is especially challenging because of serious problems with tax evasion and administration, among other things. This class provides an in-depth exploration of tax policy, with an emphasis on the challenges and issues most relevant in emerging markets. Topics addressed in this class include: how basic economic principles can be applied to help one think about the efficiency and equity consequences of tax policies; how personal income taxes, corporate income taxes, and value-added taxes are designed and administered and how they influence the economy; ideas for fundamental reforms of these taxes; theory and evidence in the debate over progressive taxes versus "flat" taxes; how various elements of tax design affect incentives to save and invest; how market failures may influence the optimality of different tax policies; the implications of global capital flows and corporate tax avoidance for the design of tax policy; tax holidays and other special tax incentives for investment; empirical evidence on the influence of taxes on economic growth, foreign direct investment, labor supply, and tax evasion; case studies of efforts to reform tax administration and reduce tax evasion and corruption; taxes on land and property; presumptive taxation; the "unofficial" economy and its implications for tax policy; tax policy towards natural resources such as minerals and oil; taxes on imports and exports; non-tax methods of raising revenue; and political economy considerations in tax policy.
Class Format: seminar
Requirements/Evaluation: midterm exam, problem sets, two short essays and a final 10- to 15-page research paper
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Prerequisites: one public economics course or microeconomics course (ECON 503 or ECON 110), and one empirical methods course (ECON 253, 255, 510, or 511); students who have previously taken ECON 351 will not be enrolled
Enrollment Preference: CDE students, but undergraduates with the prerequisites are welcome
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Divisional Attributes: Division II, Quantitative and Formal Reasoning
Other Attributes: POEC Comparative POEC/Public Policy Courses
Enrollment Limit: 19
Expected Enrollment: 15-19
Class Number: 3874
ECON514-01(S) SEM Tax Policy in Emerging Markets (Q) Division 2: Social StudiesQuantitative and Formal Reasoning William M. Gentry
TR 08:30 AM-09:45 AM CDE 3874
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