Public Factors and Democracy in Poverty Analysis
If human capital formation necessitates public factors and if the latter are financed by a flat-rate income tax, a neoclassical growth model will produce a growth rate of per capita income and real wages that is proportional to the rate of population growth. If a golden rule tax is not available, taxation in accordance with the preferences of people with higher than average capital income or lower abilities in producing human capital will lead to lower tax rates and median voter democracy to higher tax rates if computed to the golden rule. The level of wages is shown to be lower the lower the tax rate, thus relating tax resistance, democracy and poverty. Copyright 1990 by Royal Economic Society.
Volume (Year): 42 (1990)
Issue (Month): 1 (January)
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