CAPITAL TAXATION IN A SIMPLE FINITE-HORIZON OLG MODEL

Charles Blackorby () and Craig Brett ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: In a simple finite-horizon overlapping-generations model where the government has the power to levy commodity taxes and to implement uniform lump-sum transfers, and individuals as well as the government can purchase units of a storable good in order to transfer resources from the present to the future, we derive the equations that implicitly define the taxes and subsidies that are part of the second-best Pareto optima. In this context we first show that there is production efficiency. We then show that taxes on capital income/savings are required at almost all Pareto optima. Finally we show that there are no restriction on preferences or technologies that are consistent with a general exemption of capital income/savings from the tax base.

Keywords: overlapping generations; capital taxes; tax-reform (search for similar items in EconPapers)
JEL-codes: D5 D6 D91 H2 (search for similar items in EconPapers)
Date: 2004
View list of references View citations in EconPapers

Downloads: (external link)
http://www2.warwick.ac.uk/fac/soc/economics/resear ... cations/twerp709.pdf

Related works:
Working Paper: Capital Taxation in a Simple Finite-Horizon Old Model (2000)
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:wrk:warwec:709

Access Statistics for this paper

More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics
Contact information at EDIRC.
Series data maintained by Margaret Nash ().