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Optimal factor taxation under wage bargaining – a dynamic perspective

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Author Info
Koskela, Erkki
von Thadden, Leopold
Abstract

We consider the issue of steady-state optimal factor taxation in a Ramsey-type dynamic general equilibrium setting with two distinct distortions: i) taxes on capital and labour are the only available tax instruments for raising revenues, and ii) labour markets are subject to a static inefficiency resulting from wage bargaining. If considered in isolation, under broad assumptions the two distortions create conflicting demands on the wage tax, while calling for a zero capital tax. By combining the two distortions, we arrive at the conclusion that both instruments should be used, implying that the zero-capital tax result in general is no longer valid under imperfectly competitive labour markets. Dieses Papier untersucht Aspekte einer Steady-State optimalen Faktorbesteuerung in einem dynamischen Gleichgewichtsmodell vom Ramsey-Typ mit zwei besonderen Verzerrungen: i) Steuern auf Kapital- und Arbeitseinkommen sind die einzig verfügbaren Instrumente für die Erhebung von Staatseinnahmen; ii) die Arbeitsmärkte weisen eine statische Ineffizienz aufgrund von Lohnverhandlungen auf. Jeweils für sich betrachtet, implizieren die beiden Verzerrungen in unserem Modellrahmen unter breiten Annahmen gegenläufige Anforderungen an die Steuer auf Arbeitseinkommen, während die Kapitalsteuer einen Wert von Null annehmen sollte. Werden jedoch beide Verzerrungen gleichzeitig in Betracht genommen, sollten beide Steuerinstrumente eingesetzt werden. Mit anderen Worten : es wird gezeigt, dass das Resultat einer Kapitalsteuer in Höhe von Null im allgemeinen nicht länger gültig ist, wenn die Arbeitsmärkte durch unvollständige Konkurrenz charakterisiert sind.

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2002,31.

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Date of creation: 2002
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Handle: RePEc:zbw:bubdp1:4195

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Keywords: Optimal taxation Imperfectrly competitive labour markets Capital accumulation

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Find related papers by JEL classification:
E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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