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Title:Capital taxation, long-run growth, and bequests PDF Logo
Authors:Kunze, Lars
Issue Date:2009
Series/Report no.:Ruhr economic papers 113
Abstract:It has been shown that higher capital taxes can have a growth-enhancing effect when combined with a revenue-compensating cut in wage taxes (Uhlig and Yanagawa 1996; European Economic Review 40, 1521-1540) or with an expansion in productivity-increasing public services (Rivas 2003; European Economic Review 47, 477-503). The present paper demonstrates that these results critically hinge on the existence of a bequest motive. It is shown that a wage-tax cut is no longer growth-enhancing when bequests are operative. By way of contrast, increasing productive public services may well boost growth. The theoretical findings are illustrated by numerical simulations based on US data.
Subjects:Capital income taxation
public spending
overlapping generations
growth
family altruism
JEL:D64
D91
H24
H50
O40
ISBN:978-3-86788-126-5
Document Type:Working Paper
Appears in Collections:Ruhr Economic Papers, RWI
Publikationen von Forscherinnen und Forschern des RWI

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