scholarly journals Automation and Optimal Capital Income Taxation

2020 ◽  
Author(s):  
Yuuki Maruyama
Keyword(s):  
Open Economy ◽  
Income Tax ◽  
Value Added ◽  
Income Taxation ◽  
Marginal Productivity ◽  
Labor Costs ◽  
Capital Income ◽  
Value Added Tax ◽  
Real Wages ◽  
Capital Income Taxation

This model shows that capital income taxation does not affect real wages. Judd's theorem (1985) that a zero capital income tax rate is optimal for workers is based on the assumption that all capital has the effect of increasing the marginal productivity of labor. However, in reality, some capital lowers the marginal productivity of labor through automation (technological unemployment). Therefore, this model assumes two types of capital. Labor-complementing capital increases the marginal productivity of labor (real wages), while labor-substituting capital decreases it. The rates of return are kept equal between the two. Using such an economic growth model, we analyze the long-run effects of taxes on real wages. Even if capital income tax is imposed, real wages don’t change because both labor-complementing capital and labor-substituting capital decrease. In contrast, value-added tax results in reduced real wages. This is because labor costs are deducted in capital income tax, but not in value-added tax. Capital income tax is more suitable for income redistribution than value-added tax. These conclusions also apply to an open economy.

Capital Income Taxation, Economic Growth and Heterogeneity in the Motivation to Give

2012 ◽  
Vol 13 (3) ◽  
pp. 291-306
Author(s):  
Lars Kunze
Keyword(s):  
Economic Growth ◽  
Income Tax ◽  
Overlapping Generations ◽  
Income Taxation ◽  
Capital Income ◽  
Capital Income Taxation ◽  
Overlapping Generations Model ◽  
Tax Rate ◽  
Motivation To Give ◽  
The Relationship

Abstract This study provides a comprehensive analysis of the relationship between capital income taxation and economic growth within an overlapping generations model when individuals may bequeath wealth. The altruistic concern is modeled as a synthesis of joy-of-giving and family altruism so that individuals may derive utility from the amount of bequest itself and by providing children with a disposable income later on in life. Using this framework, it is shown that, in contrast to the existing literature, increasing the capital income tax rate may well enhance growth under operative bequests.

Optimal capital-income taxation in a model with credit frictions

2014 ◽  
Vol 0 (0) ◽  
Author(s):  
Salem Abo-Zaid
Keyword(s):  
Income Tax ◽  
Income Taxation ◽  
Capital Income ◽  
Capital Income Taxation ◽  
Tax Rate ◽  
Long Run ◽  
Redistributive Taxation ◽  
Optimal Capital ◽  
Credit Frictions ◽  
The Government

AbstractThe optimality of the long-run capital-income tax rate is revisited in a simple neoclassical growth model with credit frictions. Firms pay their factors of production in advance, which requires borrowing at the beginning of the period. Borrowing, in turn, is constrained by the value of collateral that they own at the beginning of the period, leading to inefficiently low amounts of capital and labor. In this environment, the optimal capital-income tax in the steady state is non zero. Specifically, the quantitative analyses show that the capital-income tax is negative and, therefore, the distortions stemming from the credit friction are offset by subsidizing capital. However, when the government cannot distinguish between capital-income and profits, the capital-income tax is positive as the government levies the same tax rate on both sources of income. These results stand in contrast to the celebrated result of zero capital-income taxation of Judd (Judd, K. 1985. “Redistributive Taxation in a Simple Perfect Foresight Model.”

Union Wage Setting and Capital Income Taxation in Dynamic General Equilibrium

2001 ◽  
Vol 2 (2) ◽  
pp. 141-175 ◽  
Author(s):  
Thomas Aronsson ◽  
Karl-Gustaf Löfgren ◽  
Tomas Sjögren
Keyword(s):  
General Equilibrium ◽  
Union Wage ◽  
Cost Benefit ◽  
Dynamic General Equilibrium ◽  
Income Taxation ◽  
Capital Income ◽  
Real Wages ◽  
Wage Setting ◽  
Capital Income Taxation ◽  
Small Shift

Abstract This paper concerns the effects of capital income taxation in a dynamic general equilibrium framework with union wage setting, when households face taxes related to both labor and capital. One purpose is to characterize the general equilibrium solution. Another is to study the effects of increased capital income taxation - in terms of the responses in real wages, employment, capital stock, output and consumption - and relate these behavioral responses to the overall tax structure. We also derive a cost-benefit rule for the purpose of analyzing the welfare effects of a small shift from labor income taxation to capital income taxation.

scholarly journals THE CONCEPT OF CORPORATE REFORM INCOME TAXATION IN UKRAINE

2021 ◽  
Vol 4 (39) ◽  
pp. 130-137
Author(s):  
N. Mamontova ◽  
V. Vityuk
Keyword(s):  
Income Tax ◽  
Negative Impact ◽  
Value Added ◽  
Income Taxation ◽  
Corporate Income Tax ◽  
Corporate Management ◽  
Value Added Tax ◽  
Public Attention ◽  
Corporate Income Taxation ◽  
Low Efficiency

Abstract. The article examines the feasibility and relevance of reforming corporate income taxation in Ukraine. We have scrutinized scientific researches of domestic and foreign scientists. The low fiscal efficiency of corporate income tax has been investigated and a stable relationship has been detected between the level of tax payment and a set of additional factors, namely the level of corporate management, the form of ownership and public attention. The high weight of the payment of income tax in the overall structure of the top-30 enterprises of Ukraine for the payment of taxes was noted. The international experience of corporate income taxation is analyzed and summarized. The necessity of replacing the income tax with another type of corporate income taxation has been substantiated. Systemic problems of the effectiveness of the existing models of corporate income taxation in the world are noted. The negative impact of low-tax on the functioning of tax systems in a lot of countries and the creation of the effect of uneven tax burden is emphasized. Information on the practical experience of introducing a tax on withdrawn capital in the foreign countries has been systematized. The low efficiency of that concept and the inexpediency of using this concept in the modern domestic conditions have been investigated. The possibility of replacing the value added tax has been assessed and the critical dependence of the budget incomes on the tax has been established. Concept of reforming corporate income taxation was developed and substantiated by introducing 1% turnover tax in addition to value added tax and the complete abolition of income tax. The volume of tax receipts for 2010—2019 has been estimated in the case of the introduction of author's concept of corporate taxation of income instead of current taxation system. The positive consequences for Ukrainian economy have been evaluated and systematized. Strong need to form a new tax culture and philosophy of interaction between representatives of tax authorities and business was emphasized. Keywords: corporate income taxation, corporate income tax, tax on withdrawn capital, turnover tax. JEL Classіfіcatіon H25 Formulas: 0; fig.: 0; tabl.: 3; bibl.: 19.

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