Effects of Flat-Rate Taxes: to What Extent Does the Leisure Specification Matter?

Manuel Gómez

Review of Economic Dynamics, 2003, vol. 6, issue 2, 404-430

Abstract: This paper explores the implications that the specification of the leisure activity has on the effects of alternative forms of taxation in a two-sector endogenous growth model of the US economy. Growth and welfare effects of tax reforms are shown to depend markedly on the leisure specification. We also compute the optimal tax structure of factor incomes and consumption taxation. The optimal tax rate on capital income is rather robust to the leisure specification. However, the balance between consumption and labor income taxation and the effects of shifting to the optimal tax structure vary considerably across leisure specifications. (Copyright: Elsevier)

Keywords: Tax structure; Endogenous growth; Welfare (search for similar items in EconPapers)
JEL-codes: H21 O41 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (11)

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DOI: 10.1016/S1094-2025(03)00008-5

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