This project lies at the intersection of the political economy literature and the theory of optimal taxation. Its objective is to initiate an analysis on the links between inequalities, migration, and democracy. The first working package focuses on income redistribution, with an emphasis on middle classes. The second working package’s ambition is to estimate the impact of the tax and transfer system, and its media coverage, on far-right parties’ voting shares. This analysis will shed light on the determinants of the rising propensity of the middle class to vote in favor of these far-right parties.
In the first working package, we first aim at measuring the evolution of pre-tax and post-tax income inequality and evaluating the redistributive impact of taxes and transfers on inequality in France since the beginning of the XXth century. We will then conduct two complementary analysis of behavioral responses to taxation among top income earners. The first study will analyze how taxation affects the decision of top income earners to emigrate. The second study will estimate how the design of income taxes may influence labor supply responses and/or the use of tax optimization strategies. Next, we will use the estimated behavioral responses to determine the top of the Laffer curve, that is, the rate of taxation at which tax revenue is maximized. Current top tax rates ranging below this estimated tax rate would suggest the existence of unexploited margins of redistribution, and therefore opportunities to implement tax reforms that would redistribute a part of the tax burden from the middle class to top-income earners. Such reforms, consistent with economic efficiency, would also improve the equity of the tax-and -transfer system. Finally, we turn our analysis into their political feasibility. We will explore this issue by providing theoretical foundations to the political process underlying redistributive policies in a context of international migration.
In the second working package, we will first evaluate the effect of taxation and its evolution on the far-right vote in France. This quantitative analysis will allow us to compare the effect of taxation with that of other socio-economic determinants of the far-right vote identified by the literature, such as unemployment, exposure of low skill workers to import competition, or immigration. Using a structural model of vote, we will then conduct a counterfactual exercise allowing us to quantify the impact of tax reforms favoring the middle class on the far-right vote. We will finally analyze the role of media (traditional or social) on the evolution of the far-right vote. More precisely, we will estimate the effect of the media coverage of tax evasion or tax optimization strategies implemented by individuals or firms on the far-right vote.
Monsieur Laurent Simula (GROUPE D'ANALYSE ET DE THEORIE ECONOMIQUE LYON - ST-ETIENNE)
The author of this summary is the project coordinator, who is responsible for the content of this summary. The ANR declines any responsibility as for its contents.
GATE GROUPE D'ANALYSE ET DE THEORIE ECONOMIQUE LYON - ST-ETIENNE
CREST Centre de Recherche en Economie et Stastistique - CREST
Help of the ANR 272,127 euros
Beginning and duration of the scientific project: March 2020 - 48 Months