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

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Author Info
Manuel Gomez (University of A Coruna)

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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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Publisher 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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Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Creina Day & Garth Day, 2007. "Fiscal Reform, Growth and Current Account Dynamics," ANUCBE School of Economics Working Papers 2007-485, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
  2. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor and Francis Journals, vol. 14(4), pages 377-399, December. [Downloadable!] (restricted)
    Other versions:
  3. Orlando Gomes, 2007. "When Leisure Becomes Excessive: a Bifurcation Result in Endogenous Growth Theory," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 26, pages 6-14, December. [Downloadable!]
    Other versions:
  4. Manuel A. Gómez, 2004. "The effect of the government temporal horizon on the optimal tax structure," Economics Bulletin, Economics Bulletin, vol. 8(1), pages 1-8. [Downloadable!]
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