Social discounting, migration, and optimal taxation of savings
AbstractWe study the problem of optimal inheritance and capital income taxation in an economy with migration. We find that, contrary to previous studies on OLG models, even if the utility function is assumed to be homothetic and separable in consumption and leisure, a non-zero tax result emerges whenever the policy maker attaches weights to the individual utility functions in the social welfare function that are allowed to vary through time, for example, according to the demographic dynamics of the economy. We also perform a welfare analysis of the choice among different social weights: the results depend on several factors, among which the extent of the distortions induced by the tax instruments vis-à-vis the suboptimality of the market allocation in an OLG economy, deriving from the disconnection among generations. Copyright 2010 Oxford University Press 2009 All rights reserved, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Economic Papers.
Volume (Year): 62 (2010)
Issue (Month): 3 (July)
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Other versions of this item:
- Valeria DeBonis & Luca Spataro, 2006. "Social discounting, migration and optimal taxation of savings," CHILD Working Papers wp11_06, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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- Luca Spataro & Thomas I. Renstroem, 2010.
"Optimal taxation, critical-level utilitarianism and economic growth,"
2010_06, Durham University Business School.
- Spataro, Luca & Renström, Thomas I., 2012. "Optimal taxation, critical-level utilitarianism and economic growth," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 727-738.
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