Is Foreign-Owned Capital a Bad Thing to Tax?
The aging population has raised at least two concerns about tax policy. First, taxes will need to be increased to cover higher public-pension and medical-care expenses when baby boomers have retired. Second, taxes can be cut in the meantime, as the government realizes the "fiscal dividend" that accompanies its debt reduction program (that has been motivated by the aging population development). This paper uses a simple endogenous growth analysis to examine these issues. It is assumed that sales tax increases are infeasible on political grounds. Two conclusions emerge: the income tax rate levied on domestic residents should be cut during the debt-reduction period, and the tax rate on foreigners whose capital is operating in Canada should be increased later on when the bulk of the baby boomers have retired.
|Date of creation:||Jun 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (905) 525-9140 ext. 22765
Fax: (905) 521-8232
Web page: http://www.mcmaster.ca/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- N. Gregory Mankiw, 2000.
"The Savers-Spenders Theory of Fiscal Policy,"
American Economic Review,
American Economic Association, vol. 90(2), pages 120-125, May.
- N. Gregory Mankiw, 1999. "The Savers-Spenders Theory of Fiscal Policy," Harvard Institute of Economic Research Working Papers 1888, Harvard - Institute of Economic Research.
- N. Gregory Mankiw, 2000. "The Savers-Spenders Theory of Fiscal Policy," NBER Working Papers 7571, National Bureau of Economic Research, Inc.
- repec:cup:macdyn:v:6:y:2002:i:2:p:307-35 is not listed on IDEAS
- Turnovsky, Stephen J., 2002. "Knife-Edge Conditions And The Macrodynamics Of Small Open Economies," Macroeconomic Dynamics, Cambridge University Press, vol. 6(02), pages 307-335, April.
- Milbourne, Ross, 1995. "Economic Growth and Convergence in Open Economies," Australian Economic Papers, Wiley Blackwell, vol. 34(65), pages 309-21, December.
- van der Ploeg, Frederick, 1996. "Budgetary Policies, Foreign Indebtedness, the Stock Market, and Economic Growth," Oxford Economic Papers, Oxford University Press, vol. 48(3), pages 382-96, July.
- J. B. Burbridge & W. M. Scarth, 1995. "Eliminating Interest Taxation and Tariffs: The Underpinnings for Recent Canadian Policy," Canadian Journal of Economics, Canadian Economics Association, vol. 28(2), pages 437-49, May.
- Stephen Turnovsky, 1999.
"Knife-Edge Conditions and the Macroeconomics of Small Open Economies,"
Discussion Papers in Economics at the University of Washington
0031, Department of Economics at the University of Washington.
- Stephen Turnovsky, 1999. "Knife-Edge Conditions and the Macroeconomics of Small Open Economies," Working Papers 0031, University of Washington, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:mcm:qseprr:422. 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: ()
If references are entirely missing, you can add them using this form.