Dynamic Tax Reforms
AbstractThis paper derives novel formulas for the welfare gains of any tax reform around initial (optimal or suboptimal) dynamic tax systems. We use a perturbation-based method to express these formulas in terms of easily interpretable and empirically estimable parameters: elasticities of income and savings with respect to the tax rates, and the shape of the income and savings distributions. This generates new theoretical insights about dynamic optimal taxes, as well as policy implications regarding directions of tax reforms of the current US tax code.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 879.
Date of creation: 2013
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Web page: http://www.EconomicDynamics.org/society.htm
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This paper has been announced in the following NEP Reports:
- NEP-ACC-2014-02-02 (Accounting & Auditing)
- NEP-ALL-2014-02-02 (All new papers)
- NEP-DGE-2014-02-02 (Dynamic General Equilibrium)
- NEP-PBE-2014-02-02 (Public Economics)
- NEP-PUB-2014-02-02 (Public Finance)
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- Findeisen, Sebastian & Sachs, Dominik, 2014. "Efficient Labor and Capital Income Taxation over the Life Cycle," Working Papers 14-17, University of Mannheim, Department of Economics.
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