Incidence of a Capital Income Tax in a Growing Economy with Variable Savings Rates

1974 ◽  
Vol 41 (4) ◽  
pp. 505 ◽  
Author(s):  
Martin Feldstein
Keyword(s):  
Income Tax ◽  
Capital Income ◽  
Growing Economy ◽  
Savings Rates

scholarly journals Taxing Capital? Not a Bad Idea After All!

2009 ◽  
Vol 99 (1) ◽  
pp. 25-48 ◽  
Author(s):  
Juan Carlos Conesa ◽  
Sagiri Kitao ◽  
Dirk Krueger
Keyword(s):  
Income Tax ◽  
Labor Income ◽  
Income Shocks ◽  
Capital Income ◽  
Overlapping Generations Model ◽  
Cycle Structure ◽  
Tax Rate ◽  
Average Household Income ◽  
Optimal Capital

We quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks and permanent productivity differences of households. The optimal capital income tax rate is significantly positive at 36 percent. The optimal progressive labor income tax is, roughly, a flat tax of 23 percent with a deduction of $7,200 (relative to average household income of $42,000). The high optimal capital income tax is mainly driven by the life-cycle structure of the model, whereas the optimal progressivity of the labor income tax is attributable to the insurance and redistribution role of the tax system. (JEL E13, H21, H24, H25)

scholarly journals The Fiscal State-Dependent Effects of Capital Income Tax Cuts

2020 ◽  
Vol 20 (71) ◽  
Author(s):  
Alexandra Fotiou ◽  
Wenyi Shen ◽  
Shu-Chun Susan Yang
Keyword(s):  
Regime Switching ◽  
Income Tax ◽  
Government Debt ◽  
Smooth Transition ◽  
Consumption Tax ◽  
Capital Income ◽  
State Dependent ◽  
Fiscal State ◽  
High Level ◽  
Tax Cuts

Using the post-WWII data of U.S. federal corporate income tax changes, within a Smooth Transition VAR, this paper finds that the output effect of capital income tax cuts is government debt-dependent: it is less expansionary when debt is high than when it is low. To explore the mechanisms that can drive this fiscal state-dependent tax effect, the paper uses a DSGE model with regime-switching fiscal policy and finds that a capital income tax cut is stimulative to the extent that it is unlikely to result in a future fiscal adjustment. As government debt increases to a sufficiently high level, the probability of future fiscal adjustments starts rising, and the expansionary effects of a capital income tax cut can diminish substantially, whether the expected adjustments are through a policy reversal or a consumption tax increase. Also, a capital income tax cut need not always have large revenue feedback effects as suggested in the literature.

Tax Competition through Tax Evasion / Steuerwettbewerb über Steuerhinterziehung

2001 ◽  
Vol 221 (3) ◽  
Author(s):  
Klaus Beckmann
Keyword(s):  
Tax Evasion ◽  
Information Exchange ◽  
Tax Competition ◽  
Income Tax ◽  
Capital Income ◽  
The Core ◽  
Evasion Game ◽  
Tax Haven ◽  
Tax Harmonisation ◽  
Competitive Behaviour

SummaryIn the present paper, I analyse the competitive behaviour of benevolent governments in the presence of (capital) income tax evasion when information exchange is not possible. My approach is to introduce a cost of evasion function into an otherwise standard tax competition model and to explore three variants of the basic tax competition cum evasion game.Two distinct justifications for tax harmonisation emerge. First, harmonisation of taxation at the source can be supported with the usual spill-over argument that is at the core of the tax competition literature. This kind of argument does not apply to the harmonisation of residence-based taxes, however. Second, in a strategic situation where a tax haven facilitates tax evasion by citizens of the rest of the world, countries may find it to their advantage to coordinate their residence-based tax policies as well.

scholarly journals Labor or Capital Income Tax for Growth in an Aging Society

2020 ◽  
Vol 7 (5) ◽  
pp. 54
Author(s):  
Yusuke Miyake
Keyword(s):  
Growth Rates ◽  
Income Tax ◽  
Public Capital ◽  
Type Model ◽  
Labor Income ◽  
Private Capital ◽  
Capital Income ◽  
The Public ◽  
Aging Society ◽  
Argument Type

This study analyzes whether taxation of labor income or capital income maximizes growth rates, with labor-argument type model, in an aging society. There are certain conditions that maximize growth rates which are indicated by the share of public capital-public pensions. The results of this analysis taxing capital income is better in an economy where private capital is drastically larger than the public capital found in an aging society.

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