Tax Buyouts

Marco Del Negro, Fabrizio Perri and Fabiano Schivardi
Additional contact information
Fabiano Schivardi: University of Cagliari, EIEF and CEPR

No 1007, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: The paper studies a fiscal policy instrument that can reduce fiscal distortions without affecting revenues, in a politically viable way. The instrument is a private contract (tax buyout), offered by the government to each citizen, whereby the citizen can choose to pay a fixed price in exchange for a given reduction in her tax rate for a period of time. We introduce the tax buyout in a dynamic overlapping generations economy, calibrated to match several features of the US income, taxes and wealth distribution. Under simple pricing, the introduction of the buyout is revenue neutral but, by reducing distortions,it benefits a significant fraction of the population and leads to sizable increases in aggregate labor supply, income and consumption.

Pages: 42 pages
Date: 2010, Revised 2010-03
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Tax buyouts (2010)
Working Paper: Tax buyouts (2010)
Working Paper: Tax buyouts (2010)
Working Paper: Tax buyouts (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:1007

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