Capital Income Taxation, Economic Growth, and the Politics of Public Education

Tetsuo Ono and Yuki Uchida

MPRA Paper from University Library of Munich, Germany

Abstract: This study considers the politics of public education and its impacts on economic growth and welfare across generations. Public education is funded by taxing the labor income of the working generation and capital income of the retired. We employ probabilistic voting to demonstrate the politics of taxes and expenditure and show that aging results in a shift of the tax burden from the old to the young and a slowdown of economic growth. We then consider three alternative constraints that limit the choice of taxes and/or expenditure: a minimum level of public education expenditure, an upper limit of the capital income tax rate, and a combination of the two. These constraints all create a trade-off between current and future generations in terms of welfare.

Keywords: Public education; Economic growth; Capital income tax; Political equilibrium (search for similar items in EconPapers)
JEL-codes: D70 E24 H52 (search for similar items in EconPapers)
Date: 2018-02-20
New Economics Papers: this item is included in nep-dge, nep-mac, nep-pbe and nep-pol
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Capital Income Taxation, Economic Growth, and the Politics of Public Education (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:86523

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