The Surprising Effects of an Employer Property Tax

Property tax on business owners in Norway led to an increase in employment in these companies; More effective – in reducing the number of young smokers – than higher taxes on cigarettes is to raise the legal age for purchasing tobacco products to 21; Not having to charge public transportation can increase its occupancy by 60%. These are just some of the conclusions reached by recent economic research.

“Does a wealth tax kill jobs?” They present a series of wealth tax reforms introduced in 2007-2017 to see how it affects investment and employment decisions in small and medium-sized businesses.

For example, in 2005-2008, the tax was 1.1%. They have assets of 540,000 Polish zloty, or roughly 229,000 Norwegian kroner. PLN. Although in 2005 there was a lower threshold of 0.9 percent. For assets of 151 thousand. Norwegian Krone (about 64,000 PLN). Gradually, the minimum eligible amount for paying the tax has been raised to 1.5 million Norwegian kroner in 2020 (approximately 640 thousand PLN). That year, the rate was 0.85 percent.

As of 2006, the above limits apply to one person. Thus, married couples had a higher vulnerability threshold and had to outperform it with the state. It is worth noting that when calculating the property value for tax purposes, 25% was assumed. The market value of the main home. In the event of owning a second residential property, it was initially assumed to be 40%. Its value for withstanding this indicator reaches 90 percent. In 2017

When it comes to stocks, in 2005, 35% of the assets were accounted for. Its market value, in 2008 this exemption was canceled. The group of Norwegians who paid the tax analyzed by the researchers had assets with an average value of 1.1 million PLN (the full market value of the assets is 2.9 million PLN). However, the tax amount is equivalent to about 12.4 PLN. PLN.

However, the most interesting thing in the analysis is that the researchers found no evidence that the wealth tax in Norway negatively affected corporate investment and employment. On the contrary, there was a positive inverse relationship between the amount of the tax and the growth of employment.

The researchers suggest that this may be because investing in an unlisted (and therefore non-marketable) company is a good way to lower its taxable value (because spending money on hiring employees does not increase the company’s book value). The higher the wealth tax, the greater the incentive to escape from it in this way.

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Economists Sarah Miller and Cindy K. Sue, “Does increased access to formal credit reduce payday borrowing?” In it, they examined what happens when people who previously filed for bankruptcy receive a bank loan again (in the US, after 10 years, the law requires that information about bankruptcy be removed from customer data, resulting in a sudden improvement in their creditworthiness rating. ).

In particular, scholars were concerned whether having access to a cheaper bank loan would make these people stop using high-interest loans from loan companies. And it turns out that nothing has changed here, and even these people are starting to borrow more money this way. The authors concluded that a state policy aimed at increasing access to bank loans for people using high-interest loans from other sources may not be effective.

Lucas W. Davis produced a study entitled “Estimating the Price Elasticity of Subway Demand: Evidence from Mexico”. It shows that when the price of metro travel in Mexico City increased by 67%. (3 to 5 pesos), city subway use decreased 12%. When in another city – Guadalajara – the price of a light city train excursion goes up by 36%. Travel out by 9 percent. On the other hand, when Metro Monterey introduced free transport for all for 60 days, its use increased by 61%.

The following cases show that the price elasticity is -0.25 -0.32 and -0.23 respectively. In the era of the epidemic, the use of public transportation has decreased dramatically. As a result, some cities are having trouble with how to finance public transportation with fewer users. Knowing price elasticity indicators allows you to predict what will happen to your revenue after ticket prices change.

Joan Costa Font and Mario Giori prepared the paper “Can Unearned Income Make Us Fitter? Evidence of Lottery Victories.” Note that lower income tends to be associated with higher income. Scientists decided to check whether winning the lottery would have an effect on the personalities of the lucky ones.

They took into account data from the United Kingdom, where about half of the population takes part in the lottery. It turns out that within twelve months after winning 10,000 pounds (about 50 thousand PLN) the excess weight of the winners decreases by 2-3 percentage points. However, this relationship is not linear. Small gains increase excess weight, while larger gains reduce it.

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Calvin Bryan, Benjamin Hansen, Drew McNicols and Joseph J. Sabia produced the study, which opens in New Window, titled “Do State Tobacco 21 Laws Work?” In it, they examined the effects of the introduction in some US states (including California and Hawaii) of a law increasing the age to buy tobacco products up to 21 years.

It turns out that as a result of the introduction of this provision, the percentage of smokers between the ages of 18 and 20 decreased by 2.5 to 4 percentage points. There is an added benefit of lowering the percentage of smokers under the age of 18, as they often ask their older co-workers to purchase tobacco. The authors concluded that raising the minimum age to purchase tobacco products appears to be a better way to reduce the number of smokers than to increase taxes on cigarettes.

Alexander Pinsky

Author of reviews and reviews of the latest economic research


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