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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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)
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:	Date Event April 2004 Published
Number:	No.709
Number of Pages:	25
Status:	Not Peer Reviewed
Access rights to Published version:	Open Access
Funder:	Social Sciences and Humanities Research Council of Canada (SSHRC)

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