Tax Policy and Present-Biased Preferences: Paternalism under International Capital Mobility

Thomas Aronsson () and Tomas Sjögren
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Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

No 833, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: This paper deals with tax-policy responses to quasi-hyperbolic discounting. Earlier research on optimal paternalism typically abstracts from capital mobility. If capital is mobile between countries, it may no longer be possible for national governments to control domestic savings via capital taxation (as in a closed economy). In this paper, we take a broad perspective on public policy responses to self-control problems by showing how these responses vary (i) between closed and open economies, (ii) between small open and large open economies, and (iii) depending on whether or not both source based and residence based capital taxes can be used.

Keywords: Quasi-hyperbolic discounting; capital mobility; source based taxation; residence based taxation; labor income taxation (search for similar items in EconPapers)
JEL-codes: D61 D91 H21 H23 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2011-10-17
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Related works:
Journal Article: Tax policy and present-biased preferences: Paternalism under international capital mobility (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:umnees:0833

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