Intergenerational transfers, tax policies and public debt

Erwan Moussault

No 2017-04, THEMA Working Papers from THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise

Abstract: This paper studies the impact of the tax system on intergenerational family transfers in an overlapping generation model of a closed economy, with endogenous human capital growth. We limit ourselves to simple tax structures with labor and inheritance taxes. When public debt is an available instrument for the government, we show that the fiscal policy used to achieve the long run optimal endogenous growth improves the individuals' consumption of the first generations. In this case, the government reduces the tax burden on labor, encourages human capital development and puts in place a redistributive policy. If the public debt is not available, the government does not pursue a redistributive policy, both tax rates implemented are higher and the long run human capital growth is greater as well. In all cases, the optimal inheritance tax rate is higher than the optimal tax rate on labor income.

Keywords: family transfers; debt; altruism; growth; optimal taxation. (search for similar items in EconPapers)
JEL-codes: D64 H21 H23 H63 I31 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-dge, nep-fdg, nep-gro, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:ema:worpap:2017-04

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