Rising allowances, rising rates — Can growth arise through business income tax reform despite government debt limit?

Marius Clemens and Werner Röger

Journal of Macroeconomics, 2024, vol. 81, issue C

Abstract: The system of business income taxation consists of two instruments, namely a statutory tax rate and a depreciation allowance on investment. We will show in this paper that by acting on both instruments simultaneously it is possible to achieve both a growth and a fiscal net revenue target even in cases when a trade-off prevails when each instrument is used individually.

Keywords: Fiscal policy; Capital allowance; Capital tax; DSGE (search for similar items in EconPapers)
JEL-codes: E61 E62 H25 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:81:y:2024:i:c:s0164070424000211

DOI: 10.1016/j.jmacro.2024.103606

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