We consider the issue of steady-state optimal factor taxation in a Ramsey-type dynamic general equilibrium setting with … two distinct distortions: i) taxes on capital and labour are the only available tax instruments for raising revenues, and … broad assumptions the two distortions create conflicting demands on the wage tax, while calling for a zero capital tax. By …

, this assumption does not seem appropriate. This paper studies the optimal factor taxation in the presence of unemployment … which results from the union-firm wage bargaining both with optimal and restricted profit taxation when capital is … internationally mobile and labour immobile. In setting tax rates the government is assumed to behave as a Stackelberg leader towards …