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- Title
Redistributive Taxation in a Simple Life-cycle Model.
- Authors
Rangazas, Peter
- Abstract
An overlapping-generations model with 'rich' and 'poor' life-cycle planners is developed. Positive aspects of redistributive capital and labour taxation are then analysed. The conditions required for Feldstein's result, that the long-run capital-labour ratio is invariant to wage taxation, are discussed. The utility frontier is shown to generally have a slope with an absolute value different from one in the neighbourhood of a no-tax equilibrium. Labour income is clearly a more efficient base for long-run redistribution only if the economy is dynamically inefficient and the rich household benefits from an increase in the gross interest rate. Even in this case, the labour-income base may not be considered more desirable when transitional effects are considered.
- Subjects
TAXATION; LABOR; CAPITAL; INCOME; ECONOMICS
- Publication
Economica, 1989, Vol 56, Issue 224, p487
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2554325