Effects of guaranteed basic income interventions on poverty-related outcomes in high-income countries: A systematic review and meta-analysis.

Background: High-income countries offer social assistance (welfare) programs to help alleviate poverty for people with little or no income. These programs have become increasingly conditional and stringent in recent decades based on the premise that transitioning people from government support to paid work will improve their circumstances. However, many people end up with low-paying and precarious jobs that may cause more poverty because they lose benefits such as housing subsidies and health and dental insurance, while incurring job-related expenses. Conditional assistance programs are also expensive to administer and cause stigma. A guaranteed basic income (GBI) has been proposed as a more effective approach for alleviating poverty, and several experiments have been conducted in high-income countries to investigate whether GBI leads to improved outcomes compared to existing social programs. Objectives: The aim of this review was to conduct a synthesis of quantitative evidence on GBI interventions in high-income countries, to compare the effectiveness of various types of GBI versus "usual care" (including existing social assistance programs) in improving poverty-related outcomes. Search Methods: Searches of 16 academic databases were conducted in May 2022, using both keywords and database-specific controlled vocabulary, without limits or restrictions on language or date. Sources of gray literature (conference, governmental, and institutional websites) were searched in September 2022. We also searched reference lists of review articles, citations of included articles, and tables of contents of relevant journals in September 2022. Hand searching for recent publications was conducted until December 2022. Selection Criteria: We included all quantitative study designs except cross-sectional (at one timepoint), with or without control groups. We included studies in high income countries with any population and with interventions meeting our criteria for GBI: unconditional, with regular payments in cash (not in-kind) that were fixed or predictable in amount. Although two primary outcomes of interest were selected a priori (food insecurity, and poverty level assessed using official, national, or international measures), we did not screen studies on the basis of reported outcomes because it was not possible to define all potentially relevant poverty-related outcomes in advance. Data Collection and Analysis: We followed the Campbell Collaboration conduct and reporting guidelines to ensure a rigorous methodology. The risk of bias was assessed across seven domains: confounding, selection, attrition, motivation, implementation, measurement, and analysis/reporting. We conducted meta-analyses where results could be combined; otherwise, we presented the results in tables. We reported effect estimates as standard mean differences (SMDs) if the included studies reported them or provided sufficient data for us to calculate them. To compare the effects of different types of interventions, we developed a GBI typology based on the characteristics of experimental interventions as well as theoretical conceptualizations of GBI. Eligible poverty-related outcomes were classified into categories and sub-categories, to facilitate the synthesis of the individual findings. Because most of the included studies analyzed experiments conducted by other researchers, it was necessary to divide our analysis according to the "experiment" stage (i.e., design, recruitment, intervention, data collection) and the "study" stage (data analysis and reporting of results). Main Results: Our searches yielded 24,476 records from databases and 80 from other sources. After screening by title and abstract, the full texts of 294 potentially eligible articles were retrieved and screened, resulting in 27 included studies on 10 experiments. Eight of the experiments were RCTs, one included both an RCT site and a "saturation" site, and one used a repeated cross-sectional design. The duration ranged from one to 5 years. The control groups in all 10 experiments received "usual care" (i.e., no GBI intervention). The total number of participants was unknown because some of the studies did not report exact sample sizes. Of the studies that did, the smallest had 138 participants and the largest had 8019. The risk of bias assessments found "some concerns" for at least one domain in all 27 studies and "high risk" for at least one domain in 25 studies. The risk of bias was assessed as high in 21 studies due to attrition and in 22 studies due to analysis and reporting bias. To compare the interventions, we developed a classification framework of five GBI types, four of which were implemented in the experiments, and one that is used in new experiments now underway. The included studies reported 176 poverty-related outcomes, including one pre-defined primary outcome: food insecurity. The second primary outcome (poverty level assessed using official, national, or international measures) was not reported in any of the included studies. We classified the reported outcomes into seven categories: food insecurity (as a category), economic/material, physical health, psychological/mental health, social, educational, and individual choice/agency. Food insecurity was reported in two studies, both showing improvements (SMD = -0.57, 95% CI: -0.65 to -0.49, and SMD = -0.41, 95% CI: -0.57 to -0.26) which were not pooled because of different study designs. We conducted meta-analyses on four secondary outcomes that were reported in more than one study: subjective financial well-being, self-rated overall physical health, self-rated life satisfaction, and self-rated mental distress. Improvements were reported, except for overall physical health or if the intervention was similar to existing social assistance. The results for the remaining 170 outcomes, each reported in only one study, were summarized in tables by category and subcategory. Adverse effects were reported in some studies, but only for specific subgroups of participants, and not consistently, so these results may have been due to chance. Authors' Conclusions: The results of the included studies were difficult to synthesize because of the heterogeneity in the reported outcomes. This was due in part to poverty being multidimensional, so outcomes covered various aspects of life (economic, social, psychological, educational, agency, mental and physical health). Evidence from future studies would be easier to assess if outcomes were measured using more common, validated instruments. Based on our analysis of the included studies, a supplemental type of GBI (provided along with existing programs) may be effective in alleviating poverty-related outcomes. This approach may also be safer than a wholesale reform of existing social assistance approaches, which could have unintended consequences.

Understanding Multiprogram Take-Up of Safety Net Programs Among California Families.

Introduction: The U.S. safety net, which provides critical aid to households with low income, is composed of a patchwork of separate programs, and many people with low income benefit from accessing <1 program. However, little is known about multiprogram take-up, that is, participation conditioned on eligibility. This study examined individual and multiprogram take-up patterns and sociodemographic factors associated with multiprogram take-up of U.S. safety net programs. Methods: The Assessing California Communities' Experiences with Safety Net Supports study interviewed Californians and reviewed their 2019 tax forms between August 2020 and May 2021. Take-up of safety net programs was calculated among eligible participants (n=365), including the Earned Income Tax Credit; Supplemental Nutrition Assistance Program; the Special Supplemental Nutrition Program for Women, Infants, and Children; and Medicaid. Multivariable regressions identified sociodemographic factors associated with take-up of multiple programs. Results: Take-up was highest for Medicaid (90.6%) and lowest for Supplemental Nutrition Assistance Program (57.5%). Among people who received benefits from at least 1 other program, take-up ranged from 81.7% to 84.8% for the Earned Income Tax Credit; 54.4%-62.0% for Supplemental Nutrition Assistance Program; 74.3%-80.1% for Special Supplemental Nutrition Program for Women, Infants, and Children; and 89.7%-98.1% for Medicaid. Having a lower income and being younger were associated with concurrent take-up of Supplemental Nutrition Assistance Program and Special Supplemental Nutrition Program for Women, Infants, and Children. Among Supplemental Nutrition Assistance Program and Special Supplemental Nutrition Program for Women, Infants, and Children recipients, having higher income, being older, and being primarily English speaking were associated with Earned Income Tax Credit take-up. Conclusions: Individual and multiprogram take-up vary between programs and by sociodemographic factors. Findings suggest opportunities to increase take-up of potentially synergistic programs by improving cross-program coordination, data sharing, and targeted recruitment of underenrolled subgroups (Supplemental Nutrition Assistance Program and Special Supplemental Nutrition Program for Women, Infants, and Children).

The Effect of the Earned Income Tax Credit on Physical and Mental health-Results from the Atlanta Paycheck Plus Experiment.

Policy Points The Paycheck Plus randomized controlled trial tested a fourfold increase in the Earned Income Tax Credit (EITC) for single adults without dependent children over 3 years in New York and Atlanta. In New York, the intervention improved economic, mental, and physical health outcomes. In Atlanta, it had no economic benefit or impact on physical health and may have worsened mental health. In Atlanta, tax filing and bonus receipt were lower than in the New York arm of the trial, which may explain the lack of economic benefits. Lower mental health scores in the treatment group were driven by disadvantaged men, and the study sample was in good mental health. CONTEXT: The Paycheck Plus experiment examined the effects of an enhanced Earned Income Tax Credit (EITC) for single adults on economic and health outcomes in Atlanta, GA and New York City (NYC). The NYC study was completed two years prior to the Atlanta study and found mental and physical benefits for the subgroups that responded best to the economic incentives provided. In this article, we present the findings from the Atlanta study, in which the uptake of the treatment (tax filings and EITC bonus) were lower and economic and health benefits were not observed. METHODS: Paycheck Plus Atlanta was an unblinded randomized controlled trial that assigned n = 3,971 participants to either the standard federal EITC (control group) or an EITC supplement of up to $2,000 (treatment group) for three tax years (2017-2019). Administrative data on employment and earnings were obtained from the Georgia Department of Labor and survey data were used to examine validated measures of health and well-being. FINDINGS: In Atlanta, the treatment group had significantly higher earnings in the first project year but did not have significantly higher cumulative earnings than the control group overall (mean difference = $1,812, 95% CI = -150, 3,774, p = 0.07). The treatment group also had significantly lower scores on two measures of mental health after the intervention was complete: the Patient Health Questionnaire 8 (mean difference = 0.19, 95% CI = 0.06, 0.32, p = 0.005) and the Kessler 6 (mean difference = 0.15, 95% CI = 0.03, 0.27, p = 0.012). Secondary analyses suggested these results were driven by disadvantaged men, but the study sample was in good mental health. CONCLUSIONS: The EITC experiment in Atlanta was not associated with gains in earnings or improvements in physical or mental health.

Revisiting the effects of state earned income tax credits on infant health: a quasi-experimental study using contiguous border counties approach.

BACKGROUND: To examine the effects of refundable state earned income tax credits (EITC) on infant health. METHODS: We use the restricted-access U.S. birth certificate data with county codes from 1989 to 2018. Birth outcomes include birth weight, low birth weight, gestational weeks, preterm birth, and the fetal growth rate. The analytical sample includes single mothers with high school education or less. Two specifications of two-way fixed effects models are employed. The first specification accounts for shared time trends across all states/counties. The second specification estimates effects based on EITC changes within contiguous counties across state borders which accounts for contemporaneous events specific to each contiguous county pair. Models are estimated pooling and stratifying by parity subgroups. RESULTS: Under the first specification, refundable state EITC is associated with improved birth outcomes. Pooling all parity, a 10%-point increase in refundable EITC is associated with an 8-gram increase in birth weight (95% CI: 2.9,14.6). The effect increases by parity. In contrast, the estimates from the second model are much smaller and statistically non-significant, both pooling and stratifying by parity. CONCLUSIONS: Comparing contiguous counties across state borders, there is no evidence that refundable state EITC affects birth outcomes. However, the estimates still do not rule out moderate to large benefits for third or higher born infants.

Measuring Take-up of the California EITC with State Administrative Data.

The Earned Income Tax Credit (EITC) is the largest cash-based means-tested transfer program in the United States. In 2021, 31 million households received $64 billion from the federal EITC. Twenty-eight states also offer eligible taxpayers a supplement to the federal program. An estimated one-fifth of eligible households fail to claim the federal credit, but little is known about take-up of these state programs. We use administrative data from California on the population of Supplemental Nutrition Assistance Program (SNAP) recipients linked to state tax records to estimate the number of households who are eligible for California's supplement to the federal EITC (CalEITC) but do not claim it. We find that over 400,000 households who received SNAP benefits and who were eligible for the state EITC in 2017 did not receive the credit. This includes approximately 40,000 eligible households who claimed the federal EITC but not the state credit; nearly 98,000 eligible households who filed a state tax return but did not claim the state or federal credit; and roughly 270,000 eligible households who did not file a state tax return. The corresponding take-up rate for the CalEITC among eligible SNAP-enrolled households was 54%. Altogether, these households left a total of $71 million in state EITC funds on the table. If received, these credits would have increased incomes among these households by 2.7% and increased total state EITC outlays by 20%.

Potential gaps in income support policies for those in poor health: The case of the earned income tax credit-A cross sectional analysis.

Background: The federal Earned Income Tax Credit (EITC) is the primary income support program for low-income workers in the U.S., but its design may hinder its effectiveness when poor health limits, but does not preclude, work. Methods: Cross-sectional analysis of nationally-representative U.S. Census Current Population Survey (CPS) data covering 2019. Working-age adults eligible to receive federal EITC were included in this study. Poor health, as indicated by self-report of at least one problem with hearing, vision, cognitive function, mobility, dressing and bathing, or independence, was the exposure. The main outcome was federal EITC benefit category, categorized as no benefit, phase-in (income too low for the maximum benefit), plateau (maximum benefit), phase-out (income above threshold for maximum benefit), or earnings too high to receive any benefit. We estimated EITC benefit category probabilities by health status using multinomial logistic regression. We further examined whether other government benefits provided additional income support to those in poor health. Results: 41,659 participants (representing 87.1 million individuals) were included. 2,724 participants (representing 5.6 million individuals) reported poor health. In analyses standardized over age, gender, race, and ethnicity, those in poor health, compared with those not in poor health, were more likely to be in the no benefit (2.40% vs. 0.30%, risk difference 2.10 percentage points [95%CI 1.75 to 2.46 percentage points]), and phase-in (9.28% vs. 2.74%, risk difference 6.54 percentage points [95%CI 5.82 to 7.26 percentage points]) categories. Differences in resources by health status persisted even after accounting for other government benefits. Conclusions: EITC program design creates an important gap in income support for those for whom poor health limits work, which is not closed by other programs. Filling this gap is an important public health goal.

US Taxation of Gambling Winnings and Incentives to Bet.

Sports betting is growing rapidly in the US after its legalization by the Supreme Court in 2018. This paper describes the treatment of gambling winnings and losses in the federal tax code and shows how the system may incentivize some gamblers to substantially increase the scale of their betting in order to have a chance to win. This incentive stems from the fact that gambling losses can only be deducted if taxpayers are filing for itemized deductions, meaning the scale of gambling losses has to be large enough to push a taxpayer's eligible deductions over the standard deduction. This incentive to engage in large-scale betting applies mostly to lower and middle-income households.

The effect of state Earned Income Tax Credit (EITC) eligibility on food insufficiency during the COVID-19 pandemic.

This paper uses data from the Household Pulse Survey to examine whether and for how long the eligibility to receive state Earned Income Tax Credit (EITC) benefits reduced self-reported household food insufficiency among lower-income households with dependent children during the COVID-19 pandemic. The results of models estimated using difference-in-differences (DD) and difference-in-difference-in-differences (DDD) methods suggest that state EITC eligibility, on average, reduced food insufficiency by about 3 percentage points between March 2021 and early October 2021. However, the results of models estimated using an event study method show that the effect was not visible in all the post-March bimonthly periods. Overall, this paper finds some evidence to suggest that state EITC eligibility reduced food insufficiency over a short period.

Poverty, redistribution, and the middle class: redistribution via probability distributions vs. redistribution via the linear income tax system.

It has been known for a long time that (1) when graphs of income amount on income relative rank for two income distributions intersect twice, three "transfer groups" are generated, with the poorest and richest both gaining under the same alternative income distribution and the middle group losing; and (2) the linear income tax system satisfies three fundamental principles of tax justice, namely, that as pretax income increases, three quantities should also increase-posttax income, tax amount, and tax rate. This paper links those two ideas, suggesting that the linear income tax system may be the natural and most effective way to guard against poverty reduction policies which, while helping the poorest, as urged by Rawls, may harm the middle, contributing to the weakening of the middle class, thought at least since Aristotle to be the backbone of society. This paper illustrates the two approaches with one initial distribution and three alternative final distributions, contrasting their minimum, median, proportion below the mean, and inequality. It also shows how to guard the linear income tax system against violating the tax amount principle of tax fairness when there is an injection of resources (e.g., from deficit spending or oil revenues) and how to empirically estimate the parameters (e.g., the marginal tax rate) of the linear income system that the population will regard as fair.

Digital Transformation on Enterprise Green Innovation: Effect and Transmission Mechanism.

With the development of blockchain, big data, cloud computing and other new technologies, how to achieve innovative development and green sustainable development in digital transformation has become one of the key issues for enterprises to obtain and maintain core competitiveness. However, little of the literature has paid attention to the impact of digital transformation on enterprise green innovation. Using the data of Chinese A-share listed companies from 2010 to 2020, this paper empirically analyzes the impact of enterprise digital transformation on green innovation and its transmission mechanism, by constructing double fixed-effect models. The results show that digital transformation has remarkably promoted the green innovation of enterprises. R&D investment, government subsidies, and income tax burden have played a conductive role between digital transformation and enterprise green innovation. Furthermore, digital transformation can significantly promote the high-quality green innovation of enterprises and also plays a more significant role in promoting the green innovation of high-tech enterprises and state-owned enterprises. A robustness test is carried out by using the lag data and changing the measurement methods of the dependent variable and independent variables, and the research conclusions are still valid. Based on resource-based theory and dynamic capability theory, this paper reveals the impact path of digital transformation on enterprise green innovation, further expanding the research field of digital transformation and enriching the research on the influencing factors of enterprise green innovation. This paper provides policy suggestions for the government to improve the enterprise green innovation level by increasing government subsidies and providing tax incentives and also provides reference for digital transformation enterprises to accelerate green innovation by increasing R&D investment, obtaining government subsidies, and acquiring tax policy support.

Public support for tax policies in COVID-19 times: evidence from Luxembourg.

We study attitudes towards the introduction of hypothetical new taxes to finance the cost of the COVID-19 pandemic. We rely on survey data collected in Luxembourg in 2020. The survey asks for the agreement of respondents over: a one-time net wealth tax, an inheritance tax, a temporary solidarity income tax, and a temporary increase in VAT. All questions include different and randomly assigned tax attributes (tax rates and exemption amounts). We find a clear divide with relatively high support for new wealth and inheritance taxes on the one hand and a low support for increases in VAT and income taxes on the other hand. While 58% of respondents agree or strongly agree with a one-time tax levied on net worth, only 24% are in favor of a small increase in VAT. Support for any tax is however negatively associated with the size of the tax as measured by the predicted revenues. Our results indicate that a one-time wealth tax could raise substantial revenues and still garner public support. Supplementary Information: The online version contains supplementary material available at 10.1007/s10797-022-09744-y.

The Impact of Tax Refund Delays on the Experience of Hardship Among Lower-Income Households.

The Earned Income Tax Credit (EITC) provides substantial financial support to low-income workers in the USA, yet around a quarter of EITC payments are estimated to be erroneous or fraudulent. Beginning in 2017, the Protecting Americans from Tax Hikes Act of 2015 requires the Internal Revenue Service to spend additional time processing early EITC claims, delaying the issuance of tax refunds. Leveraging unique data, this paper investigates how delayed tax refunds affected the experience of hardship and unsecured debt among EITC recipients. Results indicate that early filers experienced increased food insecurity relative to later filers after the implementation of the refund delay.

State earned income tax credits and depression and alcohol misuse among women with children.

About 30% of single mothers in the US live at or below the poverty line. Poverty is associated with higher risk of depression and substance use. We investigated associations between state earned income tax credit (EITC) policies and reported depressive symptoms and alcohol misuse among birthing parents who responded to Pregnancy Risk Assessment Monitoring Survey spanning 1990-2017. Nearly half of birthing parents reported no more than a high school education (45.4%; 95% CI: 45.3%-45.6%). An estimated 28.5% of birthing parents reported binge drinking in the three months prior to conception (95% CI: 28.3-28.8%). Among birthing parents, each 10 percentage-point increase in the generosity of state EITC relative to the federal EITC was associated with a lower prevalence of binge drinking (prevalence ratio = 0.96; 95% CI: 0.93-0.99) prior to conception. This association was more pronounced among birthing parents with no more than high school education (prevalence ratio = 0.92; 95% CI: 0.88-0.97). There was no association between state EITC and number of reported depressive symptoms prior to conception or after birth, except among those with lower educational attainment (prevalence ratio = 0.94; 95% CI: 0.89-0.99). Anti-poverty policies such as EITC may reduce the burden of alcohol misuse, especially among people with children.

Which Families Benefited from the Recent Personal Income Tax Reform in Taiwan: Evidence from the Administrative Data.

This paper examines the changes in vertical equity across different types of tax filing families during the span of a series of drastic personal income tax reforms in Taiwan. The newly enacted 2016 Taxpayer Rights Protection Act has brought unprecedented challenges to the tax authority's distributional goal and revenue stability. Utilizing the administrative tax return data collected by the Ministry of Finance's Fiscal Information Agency between 2016 and 2018, we show that while the income tax has contributed to improving equality in income distribution, the effects, however, were limited and even declined slightly in recent years. We also found that distributions of tax benefits are generally regressive, especially among itemized and special deductions. It is also shown that the personal exemption and the adjustments of basic living expenses provided comparably more relief to households with dependents than to those claiming no dependents. According to our two-parameter metric encompassing the usage rates and the tax-benefit distributions for each deduction, we found that itemized deductions and special deductions, in general, are regressive. Specifically, we calculate and compare different representative families' tax payments before and after the reform. While the tax reform has helped reduce many tax-filing families' tax liabilities, most tax benefits generated from the expansion of exemptions and deductions would likely be enjoyed by families with higher incomes. In a broader reform-minded context, the analysis cautions the tax authority in Taiwan and equity pursuing policy makers in other countries not to prioritize an overarching short-term equity goal over long-term revenue stabilization. Phasing out or capping some of the itemized deductions such as donations and special deductions related to discretionary purchasing decisions looks to be a promising reform path toward improving equity and restoring revenue stability.

How do taxpayers respond to tax subsidy for long-term savings? Evidence from Thailand's tax return data.

This paper uses a panel of personal income tax return data for the population of Thai tax filers to examine how individuals respond to tax subsidy for long-term savings. We utilize the 2013 tax reform that lowered the price subsidy for long-term savings in order to obtain causal identification. Our difference-in-difference analysis illustrates that there is a considerable heterogeneity in the individual responses to the subsidy cut-with middle-income taxpayers responding much more than their high-income counterparts. Among the middle-income group, we also find that the subsidy reduction has larger effects on decisions of smaller contributors. Our findings shed light on the heterogeneity of individual responses which are crucial for policymakers who consider an incremental change in the existing tax incentive scheme. Supplementary Information: The online version contains supplementary material available at 10.1007/s10797-021-09687-w.

State Policies, Racial Disparities, and Income Support: A Way to Address Infant Outcomes and the Persistent Black-White Gap?

Low birth weight and preterm births vary by state, and Black mothers typically face twice the risk that their white counterparts do. This gap reflects an accumulation of psychosocial and material exposures that include interpersonal racism, differential experience with area-level deprivation such as residential segregation, and other harmful exposures that the authors refer to as "institutional" or "structural" racism. The authors use logistic regression models and a dataset that includes all births from 1994 to 2017 as well as five state policies from this period-Aid to Families with Dependent Children/Temporary Aid for Needy Families, housing assistance, Medicaid, minimum wage, and the earned income tax credit (EITC)-to examine whether these state social policies, designed to provide a financial safety net, are associated with risk reduction of low birth weight and preterm birth to Black and white mothers, and whether variations in state generosity attenuate the racial inequalities in birth outcomes. The authors also examine whether the relationship between state policies and racial inequalities in birth outcomes is moderated by the education level of the mother. We find that the EITC reduces the risk of low birth weight and preterm birth for Black mothers. The impact is much less consistent for white mothers. For both Black and white mothers, the benefits to birth outcomes are larger for mothers with less education.

Effect of Expanding the Earned Income Tax Credit to Americans Without Dependent Children on Psychological Distress.

Antipoverty policies have the potential to improve mental health. We conducted a randomized trial (Paycheck Plus Health Study Randomized Controlled Trial, New York, New York) to investigate whether a 4-fold increase in the Earned Income Tax Credit for low-income Americans without dependent children would reduce psychological distress relative to the current federal credit. Between 2013 and 2014, a total of 5,968 participants were recruited; 2,997 were randomly assigned to the treatment group and 2,971 were assigned to the control group. Survey data were collected 32 months postrandomization (n = 4,749). Eligibility for the program increased employment by 1.9 percentage points and after-bonus earnings by 6% ($635/year), on average, over the 3 years of the study. Treatment was associated with a marginally statistically significant decline in psychological distress, as measured by the 6-item Kessler Psychological Distress Scale, relative to the control group (score change = -0.30 points, 95% confidence interval (CI): -0.63, 0.03; P = 0.072). Women in the treated group experienced a half-point reduction in psychological distress (score change = -0.55 points, 95% CI: -0.97, -0.13; P = 0.032), and noncustodial parents had a 1.36-point reduction (95% CI: -2.24, -0.49; P = 0.011). Expansion of a large antipoverty program to individuals without dependent children reduced psychological distress for women and noncustodial parents-the groups that benefitted the most in terms of increased after-bonus earnings.

Frictions and taxpayer responses: evidence from bunching at personal tax thresholds.

We exploit kinks and notches in the UK personal tax schedule over a 40-year period to investigate how taxpayers respond to income tax and social security contributions. At kinks, where the marginal rate rises, we find bunching by company owner-managers and the self-employed, but not those with only employment income. Responses to notches, where the average rate rises, provide compelling evidence that this is because most employees face substantial frictions: fewer than a quarter bunch even where doing so would increase both consumption and leisure. We develop a new approach for identifying selection in who responds and for decomposing responses into hours and wage components. We find that those employees who do bunch at notches are almost exclusively part-time workers, but tend to have lower wages and work more hours than those part-time workers who do not bunch.

Sustainable Export Innovation Behavior of Firms Under Fiscal Incentive.

The fiscal imbalance between the central and local governments under fiscal centralization may motivate local governments to pass tax burdens on firms. The causal identification of the tax system reform and the sustainable export innovation behavior of firms are of great significance. This study uses the income tax sharing policy of China to examine the impact of fiscal centralization on the sustainable export innovation behavior of firms. We find that this tax reform has significantly inhibited the increase of the export value-added rate of firms, and has an increasing trend with the share ratio between the Central Government and the local government. Moreover, this effect mainly comes from the crowding-out effect of imported intermediate goods on domestic intermediate goods. The tests show that the above conclusions are consistent with the general logic of local governments. When they face greater downward fiscal pressure, they will further pass the tax burden on local firms and force the firms to promote their export performance to expand the tax base. This short-sighted behavior of replacing "quality improvement" with "quantity increase" is an important factor that affects the sustainable export innovation behavior of firms and the climb in the global value chain.

Victory Tax: A Holistic Income Tax System.

How can an income tax system be designed to exploit human nature and a free market to create a poverty free society, while balancing budgets without disproportional tax burdens? Such a tax system, with universal character, is deduced from the following guiding principles: (1) a single tax rate applies to all income types and levels; (2) the tax rate adjusts to satisfy budget projections; (3) government transfer only supplements the income of households with self-generated income below the poverty line; (4) deductions for basic living expenses, itemized investments and capital losses are allowed; (5) deductions cannot be applied to government transfer. A general framework emerges with three parameters that determine a minimum allowed tax deduction, a maximum allowed itemized deduction, and a maximum deduction defined by income percentage. An income distribution that mimics the United States, and a series of log-normal distributions are considered to quantitatively compare detailed characteristics of this tax system to progressive and flat tax systems. To minimize government dependency while maximizing after-tax income, the effective tax rate (ETR) as a function of income percentile takes the shape of the letter, V, inspiring the name victory tax, where the middle class has the lowest ETR.