Fiscal capacity is regularly linked to warfare and democratization. However, the majority of income taxes – a cornerstone of government finance – were introduced by non-democratic states in peacetime. This paper is concerned with how autocratic politics shape the adoption and expansion of income taxes. Political institutions help overcome a commitment problem related to investments in taxation. To avoid being deposed by his or her elite supporters, a ruler needs to guarantee that new taxes will not be used opportunistically (e.g. expropriating the elite). If the elite supporters can effectively monitor the government, any transgressions will be detected and punishable. Institutions such as legislatures solve this commitment problem when they allow oversight and monitoring over the executive branch. The empirical implications are straightforward: in places with strong institutional oversight, which allows the elite to monitor the executive, we should observe higher fiscal capacity. I find support for this by analyzing newly available historical datasets over tax revenues, tax introduction dates, and political institutions.

Decisions made early in Social Security's history resulted in benefits in excess of contributions for early cohorts. This approach gave away the Trust Fund and the resulting interest that could have accumulated, which has increased the size of the payroll tax required to finance the program. This paper finds that, for the Old-Age and Survivors portion of Social Security, the Missing Trust Fund of $29.5 trillion is driven by the excess benefits given to early cohorts. Should tax increases be considered to improve the program's finances, a broad tax – such as the income tax – could be appropriate since these early payments benefitted all of society.

We estimate historical stock returns for Swedish listed companies in a newly constructed data set of daily stock prices that spans more than 100 years. Stock returns exhibit all the familiar characteristics. The growth of the public sector depressed the stock market, and the process of globalization revitalized it. Banks played an important role in the early development of the stock market. There was little trading in the past, and we examine the effects on return measurement from missing data. Stock selection and the replacement of missing transaction prices through search back procedures or limit orders make little difference to a value-weighted stock price index, while ignoring the price effects of capital operations makes a big difference.

The paper revisits the literature on real rigidities in New Keynesian models in the context of an economy at the zero lower bound. It identifies strategic interaction among price- and wage-setting agents in the economy as an important determinant of both optimal policy and economic dynamics in deep recessions. In particular, labor market segmentation is shown to have a significant influence on the length of the forward commitment to keep interest rates at zero, the magnitude of the fiscal policy responses as well as inflation volatility in the economy under optimal policy.

A whole farm Monte Carlo simulation model was used to simulate a typical rice farm on the Texas Gulf Coast for 10 years under the 1980, 1981, and 1982 income tax provisions. Results for this analysis indicate that the 1981 tax provisions clearly were more beneficial to farm operators than the 1980 or 1982 income tax provisions. While the 1981 and 1982 tax law changes clearly improved the cash flow of farm operators, they did not greatly improve the wealth positions of farm operators in the Texas Gulf Coast.

Recent media reports have revealed a substantial number of highly-paid senior civil servants and BBC presenters have been using “off payroll” arrangements and personal services companies to reduce the tax paid on their earnings. This article examines the tax and National Insurance contribution (NIC) savings that can be had by carrying on economic activity through a company rather than as an unincorporated business or an employee. These savings derive from a combination of favourable tax and NIC rates on companies, and can be further increased through family income-splitting arrangements, as witnessed in the case of Jones v Garnett. Several possible reforms to address the distortions and inequity in the present tax and NIC regimes in favour of companies are considered, including amendments to the IR35 “disguised employment” regime and the anti-income-splitting rules known as the settlement provisions. Applying the new statutory general anti-abuse rule, which the Government plans to introduce in Finance Act 2013, is another possible approach. The preferred option, however, is to deal with the root problem and pursue closer alignment of the tax and NIC treatment of activity carried on in different legal forms.

The special tax treatment of United Kingdom pensions means that the decision on how to use pension assets is particularly involved. In particular, the ability to take up to 25% of pension assets as a tax-free cash lump sum at retirement, offers retirees opportunities to enhance their pension above that possible through the purchase of a compulsory purchase annuity (“CPA”). The tax-free cash lump sum can be used to buy a tax-efficient purchased life annuity (“PLA”), or in a phased retirement strategy. Income withdrawal can also be used to defer the purchase of an annuity until age 75 and, potentially, to generate a higher income. In this paper I compare the options available to retirees using stochastic modelling. I compare the expected excess pension and expected shortfall, both relative to the alternative risk-free pension available, to assess the various options. I find that if the maximum amount of tax-free cash is available to be used to enhance retirement income, then phased retirement offers the best risk/reward trade off. The advantage is greatest for higher-rate tax payers. As the level of tax-free cash falls, income withdrawal becomes more attractive to those wishing to take greater risks.

The influence of economic ideas in parliamentary debates has attracted increasing attention in the analysis of the institutionalisation of political economy in the liberal age in the Western world. Within this framework, this paper explores a particular case: the relevance of economic ideas and the role of economists in the debates that took place in the Spanish Parliament in 1869 following the bill issued by the Minister of Finance Figuerola to establish a tax on personal incomes. Economic ideas and parliamentarian economists played a significant role in the design of the income tax as a key tool to modernise Spain's tax system, and in the subsequent parliamentary discussions.