Effect of Comprehensive Income and Consumption Taxes on Human Capital, Economic Growth, and Income Distribution: Endogenous Economic Growth and Empirical Evidence

Lingling Sun and Yasuyuki Nishigaki ()
Additional contact information
Lingling Sun: Ningbo City College of Vocational Technology, 298 Heyi Road, Haishu District, Ningbo 315010, China
Yasuyuki Nishigaki: Graduate School of Economics, Faculty of Economics, Ryukoku University, 67 Fukakusa Tsukamotocho, Fushimi Ward, Kyoto 612-8577, Japan

Economies, 2025, vol. 13, issue 7, 1-17

Abstract: This research conducts a comparative study of the economic growth and income distribution effects of consumption and comprehensive income taxes by introducing them into an endogenous economic growth model with human capital formation. We obtained the following results. First, consumption tax does not directly suppress economic growth. Instead, it promotes physical capital accumulation, which causes favorable income distribution effects for capital income earners. Second, comprehensive income tax has the direct effects of suppressing economic growth, restraining physical capital accumulation, and increasing labor supply. Third, comprehensive income tax promotes human capital accumulation, which causes a more favorable income distribution for workers. Finally, by conducting an empirical study using international panel data, we show the growth effects of human capital and educational investment and the differentiated growth effects of income and consumption taxes.

Keywords: consumption tax; comprehensive income tax; endogenous economic growth; income distribution; human capital; policy (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7099/13/7/201/pdf (application/pdf)
https://www.mdpi.com/2227-7099/13/7/201/ (text/html)

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: https://EconPapers.repec.org/RePEc:gam:jecomi:v:13:y:2025:i:7:p:201-:d:1699135

Access Statistics for this article

Economies is currently edited by Ms. Hongyan Zhang

More articles in Economies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().