Change-over within little scope: On the decision neutrality of recent tax reform proposals

Lars-Hinrich Siemers () and Daniel Zöller

MPRA Paper from University Library of Munich, Germany

Abstract: Political economy aspects make progressive income taxation and taxation of capital income imperative in practise. International tax competition and profit shifting, in turn, put pressure on corporate and capital taxes. Hence, the scope for a politically feasible change-over to a status of improved taxation is little. We provide an extended dynamic general equilibrium model and analyze politically feasible recent reform proposals referring neutrality. We then propose an alternative tax reform that, in contrast to these proposals, guarantees even growth neutrality, without necessarily jeopardizing political feasibility.

Keywords: Dynamic general equilibrium models; taxation; tax reform; decision neutrality; ACE; dual income tax (search for similar items in EconPapers)
JEL-codes: D58 H21 H24 H25 (search for similar items in EconPapers)
Date: 2011-01-06
New Economics Papers: this item is included in nep-acc, nep-dge, nep-fdg and nep-pbe
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