EconPapers    
Economics at your fingertips  
 

A growth oriented dual income tax

Christian Keuschnigg and Martin Dietz ()

International Tax and Public Finance, 2007, vol. 14, issue 2, 191-221

Abstract: This paper proposes a growth oriented dual income tax by combining an allowance for corporate equity with a broadly defined flat tax on personal capital income. Revenue losses are compensated by an increase in the value added tax. The paper demonstrates the neutrality properties of the reform with respect to investment, firm financial decisions and organizational choice. Tax rates are chosen to prevent income shifting from labor to capital income. The reform decisively strengthens investment of domestically owned firms as well as home and foreign based multinationals and boosts savings. Simulations with a calibrated growth model for Switzerland indicate that the reform could add between 4 to 5 percent of GNP in the long-run, depending on the specific scenario. Given the slow nature of capital accumulation, it imposes considerable costs in the short-run. We consider a tax smoothing scenario to offset the intergenerationally redistributive effects. Copyright Springer Science + Business Media, LLC 2007

Keywords: Tax reform; Investment; Financial structure; Growth (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1007/s10797-006-8722-4 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: A Growth Oriented Dual Income Tax (2005) Downloads
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:kap:itaxpf:v:14:y:2007:i:2:p:191-221

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2

Access Statistics for this article

International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf

More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2020-01-27
Handle: RePEc:kap:itaxpf:v:14:y:2007:i:2:p:191-221