Publication

Approaches to efficient capital taxation: leveling the playing field vs. living by the golden rule

Philippe Thalmann
1993
Journal Articles

Abstract

This paper analyzes intersectoral and intertemporal efficiency effects of the Tax Reform Act of 1986 using a general equilibrium model that considers impacts of taxes on the allocation of capital across industries, assets, sectors and time. The model pays close attentiona to capital adjustment dynamics. We find that the 1986 reform worsened the intertemporal efficiency of resource allocation by increasing marginal effective tax rates on various uses and types of capital. This negative efficiency effect is more that offset, however, by postivie effects from an improved intersectoral allocation of capital and a reduction of labor market distortions.

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https://infoscience.epfl.ch/entities/publication/8eef9841-c814-4589-85e7-617af4cc5cc8

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Philippe Thalmann
1993
Journal Articles

Abstract

Official source

https://infoscience.epfl.ch/entities/publication/8eef9841-c814-4589-85e7-617af4cc5cc8

About this result

Related concepts (30)

General equilibrium theory

In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall general equilibrium. General equilibrium theory contrasts with the theory of partial equilibrium, which analyzes a specific part of an economy while its other factors are held constant.

Tax

A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to collectively fund government spending, public expenditures, or as a way to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs.

Optimal tax

Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that maximises a social welfare function subject to economic constraints. The social welfare function used is typically a function of individuals' utilities, most commonly some form of utilitarian function, so the tax system is chosen to maximise the aggregate of individual utilities. Tax revenue is required to fund the provision of public goods and other government services, as well as for redistribution from rich to poor individuals.

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Approaches to efficient capital taxation: leveling the playing field vs. living by the golden rule

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