Rent Taxation in a Small Open Economy: The Effect on Transitional Generations

Marko Koethenbuerger and Panu Poutvaara

No 2559, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We show that taxation of rents may yield an intergenerational Pareto-improvement in a small open economy provided tax revenues are earmarked to reduce wage taxes. Previous literature has shown that rent taxation benefits current young and future generations, while we show that it also benefits the current old generation when the initially prevailing tax mix is sufficiently skewed towards wage taxation.

Keywords: capitalization; transitional dynamics; labor supply; asset prices; rent taxes (search for similar items in EconPapers)
JEL-codes: E62 F02 H22 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2007-01
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
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Published - published in: International Tax and Public Finance, 2009, 16 (5), 697-709

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