A Tale of Tax Policies in Open Economies
Stéphane Auray (),
Aurélien Eyquem and
Paul Gomme ()
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Stéphane Auray: ENSAI
No 2012-32, Working Papers from Centre de Recherche en Economie et Statistique
Tax-based deficit reduction experiments for the U.S. and EMU-12 are conducted using an open economy model. In welfare terms, raising the consumption tax is the least costly, followed by the labor income tax, then the capital income tax. Use of an open economy model means that the incidence of the consumption tax is borne in part by foreign producers. Among revenue-neutral tax experiments, partially replacing the capital income tax is welfare-enhancing, although there are short term losses. Replacing labor income tax revenue with a consumption tax improves international competitiveness and is welfare-improving
Keywords: Fiscal policies; open economies; public deficits; tax reforms (search for similar items in EconPapers)
JEL-codes: E31 E62 F41 (search for similar items in EconPapers)
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Working Paper: A Tale of Tax Policies in Open Economies (2012)
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