Production Efficiency and Profit Taxation
Stephane Gauthier and
PSE Working Papers from HAL
Consider a simple general equilibrium economy with one representative consumer, a single competitive firm and the government. Suppose that the government has to finance public expenditures using linear consumption taxes and/or a lump-sum tax on profits redistributed to the consumer. This note shows that, if the tax rate on profits cannot exceed 100 percent, one cannot improve upon the second-best optimum of an economy with constant returns to scale by using a less efficient profit-generating decreasing returns to scale technology.
Keywords: optimal taxation; taxation of profits; production efficiency (search for similar items in EconPapers)
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Journal Article: Production efficiency and profit taxation (2019)
Working Paper: Production efficiency and profit taxation (2019)
Working Paper: Production efficiency and profit taxation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-01622337
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