On the equivalence between labor and consumption taxation
This article studies the equivalence between labor and consumption taxes in a stochastic context, where the government can undertake an active portfolio management strategy by investing in both risk-free and risky assets. Using a two-period model we have shown that such taxes let consumers make the same decisions and can finance the same amount of government spending in each period.
Volume (Year): 29 (2009)
Issue (Month): 2 ()
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- Syed Ahsan & Peter Tsigaris, 1998.
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- Zodrow, George R., 1995. "Taxation, uncertainty and the choice of a consumption tax base," Journal of Public Economics, Elsevier, vol. 58(2), pages 257-265, October.
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- Louis Kaplow, 1991. "Taxation and Risk Taking: A General Equilibrium Perspective," NBER Working Papers 3709, National Bureau of Economic Research, Inc.
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