IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-03h20005.html
   My bibliography  Save this article

The effect of the government temporal horizon on the optimal tax structure

Author

Listed:
  • Manuel A. Gómez

    () (Department of Applied Economics II, University of A Coruña)

Abstract

The government temporal horizon is shown to be a key determinant of the optimal tax structure in an endogenous growth model of the US economy. As the temporal horizon lengthens, wage taxation is gradually substituted by consumption taxation. The optimal tax mix depends notably on the leisure specification.

Suggested Citation

  • Manuel A. Gómez, 2004. "The effect of the government temporal horizon on the optimal tax structure," Economics Bulletin, AccessEcon, vol. 8(1), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-03h20005
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2004/Volume8/EB-03H20005A.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Stokey, Nancy L & Rebelo, Sergio, 1995. "Growth Effects of Flat-Rate Taxes," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 519-550, June.
    2. Salvador Ortigueira, 2000. "A dynamic analysis of an endogenous growth model with leisure," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(1), pages 43-62.
    3. Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994. "Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 297-323, December.
    4. ColemanII, Wilbur John, 2000. "Welfare and optimum dynamic taxation of consumption and income," Journal of Public Economics, Elsevier, vol. 76(1), pages 1-39, April.
    5. Manuel Gomez, 2003. "Effects of Flat-Rate Taxes: to What Extent Does the Leisure Specification Matter?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(2), pages 404-430, April.
    6. Casey B. Mulligan & Xavier Sala-i-Martin, 1993. "Transitional Dynamics in Two-Sector Models of Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 739-773.
    7. Engen, Eric M. & Gravelle, Jane G. & Smetters, Kent, 1997. "Dynamic Tax Models: Why They Do the Things They Do," National Tax Journal, National Tax Association, vol. 50(3), pages 657-82, September.
    8. Mendoza, Enrique G. & Milesi-Ferretti, Gian Maria & Asea, Patrick, 1997. "On the ineffectiveness of tax policy in altering long-run growth: Harberger's superneutrality conjecture," Journal of Public Economics, Elsevier, vol. 66(1), pages 99-126, October.
    9. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-350, April.
    10. Engen, Eric M. & Gravelle, Jane G. & Smetters, Kent, 1997. "Dynamic Tax Models: Why They Do the Things They Do," National Tax Journal, National Tax Association;National Tax Journal, vol. 50(3), pages 657-682, September.
    11. Jones, Larry E. & Manuelli, Rodolfo E. & Rossi, Peter E., 1997. "On the Optimal Taxation of Capital Income," Journal of Economic Theory, Elsevier, vol. 73(1), pages 93-117, March.
    12. Chamley, Christophe, 1986. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives," Econometrica, Econometric Society, vol. 54(3), pages 607-622, May.
    13. Jones, Larry E & Manuelli, Rodolfo E & Rossi, Peter E, 1993. "Optimal Taxation in Models of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 485-517, June.
    14. Jorgenson, Dale W & Wilcoxen, Peter J, 1997. "The Long-Run Dynamics of Fundamental Tax Reform," American Economic Review, American Economic Association, vol. 87(2), pages 126-132, May.
    15. Milesi-Ferretti, Gian Maria & Roubini, Nouriel, 1998. "On the taxation of human and physical capital in models of endogenous growth," Journal of Public Economics, Elsevier, vol. 70(2), pages 237-254, November.
    16. Antonio Ladrón-de-Guevara & Salvador Ortigueira & Manuel S. Santos, 1999. "A Two-Sector Model of Endogenous Growth with Leisure," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 609-631.
    17. Islam, Muhammad Q., 1995. "Consumption path following a tax increase: Implications for the analysis of the welfare cost of taxation," Economics Letters, Elsevier, vol. 47(1), pages 83-88, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Manuel Gomez, 2003. "Effects of Flat-Rate Taxes: to What Extent Does the Leisure Specification Matter?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(2), pages 404-430, April.
    2. Gomez, Manuel A., 2007. "Optimal tax structure in a two-sector model of endogenous growth," Journal of Macroeconomics, Elsevier, vol. 29(2), pages 305-325, June.
    3. repec:ebl:ecbull:v:8:y:2004:i:1:p:1-8 is not listed on IDEAS
    4. Milesi-Ferretti, Gian Maria & Roubini, Nouriel, 1998. "On the taxation of human and physical capital in models of endogenous growth," Journal of Public Economics, Elsevier, vol. 70(2), pages 237-254, November.
    5. Philip Trostel & Ian Walker, 2006. "Education and Work," Education Economics, Taylor & Francis Journals, vol. 14(4), pages 377-399.
    6. Gian Maria Milesi-Ferretti & Nouriel Roubini, 1995. "Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis," Working Papers 95-18, New York University, Leonard N. Stern School of Business, Department of Economics.
    7. Akira Yakita, 2001. "Taxation in an Overlapping Generations Model with Human Capital," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(5), pages 775-792, November.
    8. James B. Davies & Jie Zhang & Jinli Zeng, 2000. "Optimal Tax Mix in a Two-Sector Growth Model with Transitional Dynamics," UWO Department of Economics Working Papers 200017, University of Western Ontario, Department of Economics.
    9. Lans Bovenberg, A. & Jacobs, Bas, 2005. "Redistribution and education subsidies are Siamese twins," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2005-2035, December.
    10. Minea, Alexandru, 2008. "The Role of Public Spending in the Growth Theory Evolution," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 5(2), pages 99-120, June.
    11. Berthold U. Wigger, 2004. "On the Intergenerational Incidence of Wage and Consumption Taxes," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 1-23, February.
    12. Reinhorn Leslie J., 2009. "Dynamic Optimal Taxation with Human Capital," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-21, October.
    13. Auerbach, Alan J. & Hines, James Jr., 2002. "Taxation and economic efficiency," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.),Handbook of Public Economics, edition 1, volume 3, chapter 21, pages 1347-1421, Elsevier.
    14. Chen, Been-Lon & Lu, Chia-Hui, 2013. "Optimal factor tax incidence in two-sector human capital-based models," Journal of Public Economics, Elsevier, vol. 97(C), pages 75-94.
    15. Essi Eerola & Niku Määttänen, 2013. "The Optimal Tax Treatment of Housing Capital in the Neoclassical Growth Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(6), pages 912-938, December.
    16. YAN Chengliang & GONG Liutang, 2009. "Government expenditure, taxation and long-run growth," Frontiers of Economics in China, Higher Education Press, vol. 4(4), pages 505-525, December.
    17. Nouriel Roubini & Gian Maria Milesi-Ferrett, 1994. "Taxation and Endogenous Growth in Open Economies," NBER Working Papers 4881, National Bureau of Economic Research, Inc.
    18. George R. Zodrow, 2007. "Should Capital Income be Subject to Consumption-Based Taxation?," Working Papers 0715, Oxford University Centre for Business Taxation.
    19. Cruz Echevarria & Amaia Iza, 2000. "Income Taxation and Finite Horizons in a Human Capital Model," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(6), pages 665-689, December.
    20. Chen, Been-Lon, 2007. "Factor taxation and labor supply in a dynamic one-sector growth model," Journal of Economic Dynamics and Control, Elsevier, vol. 31(12), pages 3941-3964, December.

    More about this item

    Keywords

    Endogenous growth;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-03h20005. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.