Capital Income Taxation, Cross-Ownership, and the Structure of Public Spending

Thomas Dickescheid

FinanzArchiv: Public Finance Analysis, 2001, vol. 57, issue 4, 435-458

Abstract: This paper analyses non-cooperative provision of public consumption goods and public production factors. Contrary to previous literature, a number of situations is identified where public consumption goods are oversupplied and public production factors are undersupplied. With source and residence-based capital taxes available, cross-ownership may lead to either absolute and relative underprovision of public inputs (as is intuitive) or to absolute and relative overprovision of public inputs. If only the source-based tax is available, then relative underprovision of the public production factor may occur even if the public consumption good is undersupplied in absolute terms. If only the residence-based tax is available, then relative underprovision of the public production factor results even in the absence of cross-ownership. This relative underprovision of public production factors may or may not be increased by cross-ownership.

JEL-codes: H21 H40 H87 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (6)

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