The Deadweight Costs of Capital Taxation in Australia

Walter Erwin Diewert () and D.A. Lawrance

UBC Departmental Archives from UBC Department of Economics

Abstract: Taxes distort the incentives to work, save and invest and the pattern of input use and production in the economy. The excess burden or deadweight cost of taxation is a measure of the efficiency costs of taxation - the value of the opportunities that are effectively lost when taxation diverts labour, land and capital from their best uses. The excess burden of taxing capital is likely to be particularly high given capital's increasing international mobility. However, the important issue of capital taxation has been virtually ignored in Australia's current public discussion of tax reform. In this paper we report the results of calculating dynamic deadweight losses for capital taxes in Australia based on an econometric model of the production sector. Changes to the Australian tax system since the mid-1980s have fallen relatively heavily on capital and we find that the excess burden of capital taxation has increased markedly in recent years.

Keywords: CAPITAL MARKET; TAX POLICY (search for similar items in EconPapers)
JEL-codes: H20 (search for similar items in EconPapers)
Date: 1998
View citations in EconPapers

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ubc:bricol:98-01

Access Statistics for this paper

More papers in UBC Departmental Archives from UBC Department of Economics
Series data maintained by Maureen Chin ().