Intergenerational Allocation of Government Expenditures: Externalities and Optimal Taxation
This paper studies optimal capital and labor income taxes when the benefits of public goods are age-dependent. Provided the government can impose a consumption tax, it can attain the first-best resource allocation. This involves the uniform taxation of the cohorts' labor income and a zero capital income tax. With no consumption tax and optimally chosen government spending, labor income should be taxed nonuniformly across cohorts and the capital income tax should be nonzero. Deviations of the public goods from their respective optima create distortions. These affect the labor supply decisions of both cohorts and capital accumulation, providing a further reason to tax (or subsidize) capital income. Copyright 2008 Blackwell Publishing, Inc..
Year of publication: |
2008
|
---|---|
Authors: | IQBAL, KAZI ; TURNOVSKY, STEPHEN J. |
Published in: |
Journal of Public Economic Theory. - Association for Public Economic Theory - APET, ISSN 1097-3923. - Vol. 10.2008, 1, p. 27-53
|
Publisher: |
Association for Public Economic Theory - APET |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Intergenerational allocation of government expenditures : externalities and optimal taxation
Iqbal, Kazi, (2008)
-
Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
Iqbal, Kazi, (2008)
-
The Impact of Climate Change on Agricultural Productivity: Evidence from Panel Data of Bangladesh
Iqbal, Kazi, (2014)
- More ...