Eliminating Interest Taxation and Tariffs: The Underpinnings for Recent Canadian Policy
AbstractO. J. Blanchard's (1985) formulation of the overlapping-generations model and the social welfare function advocated by G. Calvo and M. Obstfeld (1988) are used to analyze interest taxation and tariffs in a small open economy. When the revenue lost from the elimination of these taxes is replaced by raising the tax on labor, as in recent Canadian experience, a 'low' social discount rate is required for the model to support lower interest-income taxes, while a 'high' discount rate is needed to support the elimination of tariffs. The authors illustrate the empirical importance of this simultaneous need for both a 'high' and a 'low' discount rate.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 28 (1995)
Issue (Month): 2 (May)
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- William Scarth, 2007. "Is Foreign-Owned Capital a Bad Thing to Tax?," Social and Economic Dimensions of an Aging Population Research Papers 214, McMaster University.
- William Scarth, 2007. "Is Foreign-Owned Capital a Bad Thing to Tax?," Quantitative Studies in Economics and Population Research Reports 422, McMaster University.
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