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Optimal Capital Income Taxation, Investment Subsidies and Redistribution in a Neoclassical Growth Model

Rehme, Günther (2007):
Optimal Capital Income Taxation, Investment Subsidies and Redistribution in a Neoclassical Growth Model.
Darmstadt, In: Darmstadt Discussion Papers in Economics, [Online-Edition: http://tuprints.ulb.tu-darmstadt.de/4739],
[Report]

Abstract

In this paper I readdress the result that capital income taxes are bad instruments for pure redistribution and should be zero in the long run. In a neoclassical growth model a capital income cum investment subsidy tax, which is not distorting accumulation, is considered to investigate if net capital income taxes used for pure redistribution are zero in a long-run optimum. I find that capital income taxes may be nonzero, depending on the political power of those who receive redistributive transfers, the distribution of pre-tax factor incomes, and the intertemporal elasticity of substitution.

Item Type: Report
Erschienen: 2007
Creators: Rehme, Günther
Title: Optimal Capital Income Taxation, Investment Subsidies and Redistribution in a Neoclassical Growth Model
Language: English
Abstract:

In this paper I readdress the result that capital income taxes are bad instruments for pure redistribution and should be zero in the long run. In a neoclassical growth model a capital income cum investment subsidy tax, which is not distorting accumulation, is considered to investigate if net capital income taxes used for pure redistribution are zero in a long-run optimum. I find that capital income taxes may be nonzero, depending on the political power of those who receive redistributive transfers, the distribution of pre-tax factor incomes, and the intertemporal elasticity of substitution.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 188
Place of Publication: Darmstadt
Uncontrolled Keywords: Growth, Redistribution, Investment Subsidies, Capital Income Taxes
Divisions: 01 Department of Law and Economics
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
Date Deposited: 31 Jan 2016 20:58
Official URL: http://tuprints.ulb.tu-darmstadt.de/4739
URN: urn:nbn:de:tuda-tuprints-47393
Additional Information:

JEL - Classification: O41, H21, D33

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