Capital taxation, long-run growth, and bequests
It has been shown that higher capital taxes can have a growth-enhancing effect when combined with a revenue-compensating cut in wage taxes or with an expansion in productivity-increasing public services. The present paper demonstrates that these results critically hinge on the existence of a bequest motive. It is shown that a wage-tax cut is no longer growth-enhancing when bequests are operative. By way of contrast, increasing productive public services may well boost growth. The theoretical findings are illustrated by numerical simulations based on US data.
Year of publication: |
2010
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Authors: | Kunze, Lars |
Published in: |
Journal of Macroeconomics. - Elsevier, ISSN 0164-0704. - Vol. 32.2010, 4, p. 1067-1082
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Publisher: |
Elsevier |
Keywords: | Capital income taxation Public spending Overlapping generations Growth Family altruism |
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