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Tax structure, growth, and welfare in the UK

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  • Konstantinos Angelopoulos
  • James Malley
  • Apostolis Philippopoulos

Abstract

This paper studies the quantitative implications of changes in the composition of taxes for long-run growth and welfare in the UK economy. Our results suggest that if the goal of tax policy is to promote long-run growth by altering relative tax rates in a budget neutral fashion, then it should reduce labour taxes and increase capital and-or consumption taxes. In contrast, if the aim is to promote welfare, substantial gains can be obtained from tax reforms that decrease the capital tax rate relative to the labour and consumption tax rates or that reduce labour relative to consumption taxes. These findings highlight the importance of the choice of tax structure in policy design. Copyright 2012 Oxford University Press 2011 All rights reserved, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 64 (2012)
Issue (Month): 2 (April)
Pages: 237-258

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Handle: RePEc:oup:oxecpp:v:64:y:2012:i:2:p:237-258

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Cited by:
  1. Michael Hatcher, 2013. "Aggregate and welfare effects of long run inflation risk under inflation and price-level targeting," Working Papers 2013_03, Business School - Economics, University of Glasgow.
  2. George Economides & Dimitris Papageorgiou & Apostolis Philippopoulos & Vanghelis Vassilatos, 2012. "Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications," CESifo Working Paper Series 3965, CESifo Group Munich.
  3. Angelopoulos, Konstantinos & Fernandez, Bernardo X. & Malley, James R., 2010. "The Distributional Consequences of Supply-Side Reforms in General Equilibrium," SIRE Discussion Papers 2010-85, Scottish Institute for Research in Economics (SIRE).
  4. Dimitris Papageorgiou, 2009. "Macroeconomic Implications of Alternative Tax Regimes: The Case of Greece," Working Papers 97, Bank of Greece.

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