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Change-over within little scope: On the decision neutrality of recent tax reform proposals

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  • Siemers, Lars-H. R.
  • Zöller, Daniel

Abstract

Political economy aspects make progressive income taxation and taxation of capital income imperative in practise. International tax competition and profit shifting, in turn, put pressure on corporate and capital taxes. Hence, the scope for a politically feasible change-over to a status of improved taxation is little. We provide an extended dynamic general equilibrium model and analyze politically feasible recent reform proposals referring neutrality. We then propose an alternative tax reform that, in contrast to these proposals, guarantees even growth neutrality, without necessarily jeopardizing political feasibility.

Suggested Citation

  • Siemers, Lars-H. R. & Zöller, Daniel, 2011. "Change-over within little scope: On the decision neutrality of recent tax reform proposals," MPRA Paper 27943, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27943
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Dynamic general equilibrium models; taxation; tax reform; decision neutrality; ACE; dual income tax;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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