The deadweight loss from `non-neutral' capital income taxation
AbstractThis paper develops an overlapping generations general equilibrium growth model with an explicit characterization of the role of capital goods in the production process. The model is rich enough in structure to evaluate and measure simultaneously the different distortions associated with capital income taxation (across sectors, across assets and across time) yet simple enough to yield intuitive analytical results as well. The main result is that uniform capital income taxation is almost certainly suboptimal, theoretically, but that empirically, optimal deviations from uniform taxation are inconsequential. We also find that though the gains from a move to uniform taxation are not large in absolute magnitude these gains would be offset only by an overall rise in capital income tax rates of several percentage points. A separate contribution of the paper is the development of a technique for distinguishing intergenerational transfers from efficiency gains in analyzing the effects of policy changes on long-run welfare.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Public Economics.
Volume (Year): 40 (1989)
Issue (Month): 1 (October)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505578
Other versions of this item:
- Alan J. Auerbach, 1990. "The Deadweight Loss from `Non-Neutral' Capital Income Taxation," NBER Working Papers 2510, National Bureau of Economic Research, Inc.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Holmoy, Erling & Vennemo, Haakon, 1995. "A general equilibrium assessment of a suggested reform in capital income taxation," Journal of Policy Modeling, Elsevier, vol. 17(6), pages 531-556, December.
- James R. Hines Jr., 1998. "Investment Ramifications of Distortionary Tax Subsidies," NBER Working Papers 6615, National Bureau of Economic Research, Inc.
- Sijbren Cnossen & Lans Bovenberg, 2001.
"Fundamental Tax Reform in The Netherlands,"
International Tax and Public Finance,
Springer, vol. 8(4), pages 471-484, August.
- Sijbren Cnossen & Lans Bovenberg, 2000. "Fundamental Tax Reform in The Netherlands," CESifo Working Paper Series 342, CESifo Group Munich.
- Cnossen,Sijbren & Bovenberg,Lans, 2000. "Fundamental Tax Reform In The Netherlands," Research Memoranda 003, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
- Hagen, Kare P. & Kanniainen, Vesa, 1995.
"Optimal taxation of intangible capital,"
European Journal of Political Economy,
Elsevier, vol. 11(2), pages 361-378, June.
- Blackorby, Charles & Brett, Craig, 2004. "Capital Taxation In A Simple Finite-Horizon Olg Model," The Warwick Economics Research Paper Series (TWERPS) 709, University of Warwick, Department of Economics.
- Jinyong Cai & Jagadeesh Gokhale, 1997. "The welfare loss from a capital income tax," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 2-10.
- Darrel Cohen & Kevin A. Hassett & R. Glenn Hubbard, 1999.
"Inflation and the User Cost of Capital: Does Inflation Still Matter?,"
NBER Working Papers
6046, National Bureau of Economic Research, Inc.
- Darrel Cohen & Kevin Hassett & R. Glenn Hubbard, 1999. "Inflation and the User Cost of Capital: Does Inflation Still Matter?," NBER Chapters, in: The Costs and Benefits of Price Stability, pages 199-234 National Bureau of Economic Research, Inc.
- Jinyong Cai & Jagadeesh Gokhale, 1990. "What does the capital income tax distort?," Working Paper 9013, Federal Reserve Bank of Cleveland.
- Brita Bye & Turid Åvitsland, 2001. "The welfare effects of housing taxation in a distorted economy: A general equilibrium analysis," Discussion Papers 306, Research Department of Statistics Norway.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If references are entirely missing, you can add them using this form.