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Effects of Flat-Rate Taxes: to What Extent Does the Leisure Specification Matter?

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  • Manuel Gomez

    (University of A Coruna)

Abstract

This paper explores the implications that the specification of the leisure activity has on the effects of alternative forms of taxation in a two-sector endogenous growth model of the US economy. Growth and welfare effects of tax reforms are shown to depend markedly on the leisure specification. We also compute the optimal tax structure of factor incomes and consumption taxation. The optimal tax rate on capital income is rather robust to the leisure specification. However, the balance between consumption and labor income taxation and the effects of shifting to the optimal tax structure vary considerably across leisure specifications. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/S1094-2025(03)00008-5
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 6 (2003)
Issue (Month): 2 (April)
Pages: 404-430

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Handle: RePEc:red:issued:v:6:y:2003:i:2:p:404-430

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Related research

Keywords: Tax structure; Endogenous growth; Welfare;

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References

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Cited by:
  1. repec:ebl:ecbull:v:8:y:2004:i:1:p:1-8 is not listed on IDEAS
  2. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 377-399.
  3. Gomes, Orlando, 2007. "When leisure becomes excessive: a bifurcation result in endogenous growth theory," MPRA Paper 3443, University Library of Munich, Germany.
  4. Creina Day & Garth Day, 2007. "Fiscal Reform, Growth and Current Account Dynamics," ANU Working Papers in Economics and Econometrics 2007-485, Australian National University, College of Business and Economics, School of Economics.

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