Resource title

Rent taxation and its intertemporal welfare effects in a small open economy

Resource image

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Resource description

Previous literature concludes that replacing wage taxation by taxes on a fixed factor or its rents benefits future generations. However, the effects of such steady-state gains on the transition generations have been left open. In this paper, we show that taxation of rents may also increase utility of the current generation provided tax revenues are earmarked to reduce wage taxes. In particular, a shift in the tax mix may yield an intergenerational Pareto-improvement when the initially prevailing tax mix is sufficiently skewed towards wage taxation.

Resource author

Marko Koethenbuerger, Panu Poutvaara

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26202

Resource license

Adapt according to the presented license agreement and reference the original author.