Optimal nonlinear income taxation with productive government expenditure

This paper develops an endogenous growth model with a production externality and nonlinear income taxation, and uses it to examine how the fiscal authority devises its nonlinear tax structure from the viewpoint of welfare maximization. It is found that, in the Barro (1990) model, Pareto optimality can be achieved if both policy instruments for the tax scalar and the extent of the tax progressivity/regressivity are set optimally.

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Year of publication:	2012
Authors:	Lai, Ching-Chong ; Liao, Chih-Hsing
Published in:	International Review of Economics & Finance. - Elsevier, ISSN 1059-0560. - Vol. 22.2012, 1, p. 66-77
Publisher:	Elsevier
Subject:	Nonlinear income taxation \| Optimal taxation \| Endogenous growth

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Type of publication:	Article
Classification:	E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; H21 - Efficiency; Optimal Taxation ; O41 - One, Two, and Multisector Growth Models
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010573110