Capital taxation in a simple finite-horizon OLG model
Blackorby, Charles, 1937- and Brett, Craig, 1969- (2004) Capital taxation in a simple finite-horizon OLG model. Working Paper. Coventry: University of Warwick, Department of Economics. (Warwick economic research papers).
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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|
|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|Status:||Not Peer Reviewed|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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