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Productivity-enhancing public investment and benefit taxation: the case of factor-augmenting public inputs

Author

Listed:
  • James P. Feehan
  • Mutsumi Matsumoto

Abstract

Government expenditure on public inputs such as human capital formation and public infrastructure can significantly affect productivity. An interesting and highly relevant policy question is whether such expenditure should be financed according to the benefit-taxation principle. Focusing on factor-augmenting public inputs, in this paper we derive the specification of the appropriate set of benefit taxes. Rather than fall on industries according to the degree to which the public input increases their productivities, these taxes must take the form of differential taxes on factor incomes.

Suggested Citation

  • James P. Feehan & Mutsumi Matsumoto, 2000. "Productivity-enhancing public investment and benefit taxation: the case of factor-augmenting public inputs," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 114-121, February.
  • Handle: RePEc:cje:issued:v:33:y:2000:i:1:p:114-121
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    Citations

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    Cited by:

    1. repec:ebl:ecbull:v:8:y:2004:i:3:p:1-9 is not listed on IDEAS
    2. Diego Martínez López & A. Jesús Sánchez Fuentes, "undated". "Optimal Provision Of Public Inputs In A Second Best Scenario (*)," Working Papers 17-05 Classification-JEL , Instituto de Estudios Fiscales.
    3. Craig Brett & John A. Weymark, 2009. "Comparative Statics of Optimal Nonlinear Income Taxation in the Presence of a Publicly Provided Input," Vanderbilt University Department of Economics Working Papers 0910, Vanderbilt University Department of Economics.
    4. A. Sanchez & Diego Martinez, 2011. "Optimization in Non-Standard Problems. An Application to the Provision of Public Inputs," Computational Economics, Springer;Society for Computational Economics, vol. 37(1), pages 13-38, January.
    5. Derek K. Kellenberg, 2007. "The Provision Of Public Inputs And Foreign Direct Investment," Contemporary Economic Policy, Western Economic Association International, vol. 25(2), pages 170-184, April.
    6. Gugle, Elisabeth & Zodrow, George R., 2014. "Tax Competition and the Efficiency of "Benefit-Related" Business Taxes," Working Papers 14-013, Rice University, Department of Economics.
    7. Anwar, Sajid, 2006. "Provision of public infrastructure, foreign investment and welfare in the presence of specialisation-based external economies," Economic Modelling, Elsevier, vol. 23(1), pages 142-156, January.
    8. Anwar, Sajid, 2008. "Labour supply, foreign investment and welfare in the presence of public infrastructure," Economic Modelling, Elsevier, vol. 25(5), pages 959-967, September.
    9. Diego Martinez-Lopez, 2004. "The optimal provision of public inputs in a second best scenario," Economics Bulletin, AccessEcon, vol. 8(3), pages 1-9.
    10. Elisabeth Gugl & George R. Zodrow, 2014. "The Efficiency of “Benefit-Related” Business Taxes," Working Papers 1406, Oxford University Centre for Business Taxation.
    11. Thomas Aronsson & Erkki Koskela, 2009. "Outsourcing, Public Input Provision and Policy Cooperation," CESifo Working Paper Series 2886, CESifo Group Munich.
    12. Aronsson, Thomas & Koskela, Erkki, 2009. "Outsourcing, Public Input Provision and Policy Cooperation," IZA Discussion Papers 4662, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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