Productivity-enhancing public investment and benefit taxation: the case of factor-augmenting public inputs

James Feehan and Mutsumi Matsumoto

Canadian Journal of Economics, 2000, vol. 33, issue 1, 114-121

Abstract: Government expenditure on public inputs such as human capital formation and public infrastructure can significantly affect productivity. An interesting and highly relevant policy question is whether such expenditure should be financed according to the benefit-taxation principle. Focusing on factor-augmenting public inputs, in this paper we derive the specification of the appropriate set of benefit taxes. Rather than fall on industries according to the degree to which the public input increases their productivities, these taxes must take the form of differential taxes on factor incomes.

JEL-codes: H21 H54 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (18)

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