On the consequences of eliminating capital tax differentials

Ctirad Slavik and Hakki Yazici

Canadian Journal of Economics, 2019, vol. 52, issue 1, 225-252

Abstract: In the United States, different types of capital are effectively taxed at different rates. In particular, effective tax rates on structures have been higher than those on equipments. Eliminating these differentials has been the subject of policy debates. This paper analyzes the consequences of eliminating capital tax differentials using an incomplete markets model with equipmentskill complementarity. The reform improves productive efficiency by eliminating distortions in capital accumulation. It also increases the degree of equality by reducing the skill premium. The reform increases average welfare by approximately 0.11%.

JEL-codes: E62 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: On the consequences of eliminating capital tax differentials (2019)
Working Paper: On the Consequences of Eliminating Capital Tax Differentials (2014)
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