Articlehybrid1999

Optimal taxation and spending in general competitive growth models

233 citations0/0 files storedJournal of Public Economics

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Fiscal Policy and Economic Growth Economic and Fiscal Studies Economic Policies and Impacts

Abstract

We find that the optimal long-run tax on capital income is zero even if the capital stock does not converge to a steady state nor to a steady state growth rate. The optimal tax on human capital is also zero if human capital is not a final good, but the long-run wage tax is not generally zero. We argue that “consumption” tax proposals, such as the Flat Tax, are not consumption taxes, and are biased against human capital.

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References

1992A Contribution to the Empirics of Economic Growth 1985Redistributive taxation in a simple perfect foresight model 2016Optimal Taxation and Public Production II: Tax Rules 1976A Life-Cycle Model of Earnings, Learning, and Consumption 1968Optimal taxation and public production 1972The structure of indirect taxation and economic efficiency 1997On the Optimal Taxation of Capital Income 1980Welfare Implications of the Taxation of Savings

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