Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax
AbstractUnless free international lending/borrowing is allowed, domestic saving equals domestic investment and hence saving and investment taxes have the identical effect, as is the case in a closed-economy context. However, if it is allowed, households can accumulate foreign assets besides domestic capital and hence saving and investment are separated, causing the two taxes to have different effects. Using a two-sector growth model, we show that the two taxes generate completely different effects on industrial structure. The investment tax always shrinks the capital-intensive sector whereas the saving tax may well expand it.
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Date of creation: Mar 2006
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saving tax; investment tax; two-sector growth model; industrial structure; financial asset trade;
Other versions of this item:
- Yoshiyasu Ono & Akihisa Shibata, 2006. "Capital Income Taxation and Specialization Patterns: Investment Tax vs. Saving Tax," ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 0649, Institute of Social and Economic Research, Osaka University.
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-22 (All new papers)
- NEP-FMK-2006-04-22 (Financial Markets)
- NEP-MAC-2006-04-22 (Macroeconomics)
- NEP-PBE-2006-04-22 (Public Economics)
- NEP-PUB-2006-04-22 (Public Finance)
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