Optimal Taxation of Human and Physical Capital in Endogenous Capital Models

Nouriel Roubini () and Gian Maria Milesi-Ferrett
Authors registered in the RePEc Author Service: Gian Maria Milesi-Ferretti ()

No 4882, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies the effects of human and physical capital income taxation on growth, and examines how these effects depend on the technologies for human capital accumulation and 'leisure'. It then derives the normative implications of the analysis for the optimal taxation of factor incomes. It is shown that in general both capital and labor (human capital) taxes are growth-reducing. In these cases, the optimal long-run tax on both capital and labor income is zero. The optimal taxation plan consists of taxing both factors in the short run, and financing spending in the long run through accumulated budget surpluses.

JEL-codes: E62 O41 (search for similar items in EconPapers)
Date: 1994-10
Note: IFM PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published as Roubini, Nouriel and Gian Maria Milesi-Ferretti. "On the Taxation of Human and Physical Capital in Models of Endogenous Growth." Journal of Public Economics (1999).

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