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Capital taxation in a simple finite-horizon OLG model
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Blackorby, Charles and Brett, Craig (2004) Capital taxation in a simple finite-horizon OLG model. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (No.709).
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
In a simple finite-horizon overlapping-generations model where the government has the power to levy commodity taxes and to implement uniform lump-sum transfers, and individuals as well as the government can purchase units of a storable good in order to transfer resources from the present to the future, we derive the equations that implicitly define the taxes and subsidies that are part of the second-best Pareto optima. In this context we first show that there is production efficiency. We then show that taxes on capital income/savings are required at almost all Pareto optima. Finally we show that there are no restriction on preferences or technologies that are consistent with a general exemption of capital income/savings from the tax base.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HG Finance | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Capital levy, Intergenerational relations -- Economic relations, Welfare economics, Distribution (Economic theory), Income distribution | ||||
Series Name: | Warwick economic research papers | ||||
Publisher: | University of Warwick, Department of Economics | ||||
Place of Publication: | Coventry | ||||
Official Date: | April 2004 | ||||
Dates: |
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Number: | No.709 | ||||
Number of Pages: | 25 | ||||
Status: | Not Peer Reviewed | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Funder: | Social Sciences and Humanities Research Council of Canada (SSHRC) |
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