Optimal Taxation with Capital Accumulation and Wage Bargaining

Tapio Palokangas

No 966, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study examines optimal taxation in a unionized economy in which households save capital. The main findings are as follows. Judd’s (1985) and Chamley’s (1986) classical results of zero taxation on capital income holds. This is true independently of workers’ savings behaviour or the capitalists’ weight in the social welfare function. The steady-state optimal tax rates on wages and employment are specified. The consumption tax is needed for revenue raising purposes.

Keywords: wage settlement; optimal taxation; capital accumulation (search for similar items in EconPapers)
JEL-codes: H21 J51 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2003-12
New Economics Papers: this item is included in nep-edu, nep-pbe and nep-pub
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Citations: View citations in EconPapers (1)

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