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Title:Optimal capital income taxation, investment subsidies and redistribution in a neoclassical growth model PDF Logo
Authors:Rehme, Günther
Issue Date:2007
Series/Report no.:Darmstadt discussion papers in economics 188
Abstract:In this paper I readdress the result that capital income taxes are bad instruments for pure redistribution and should be zero in the long run. In a neoclassical growth model a capital income cum investment subsidy tax, which is not distorting accumulation, is considered to investigate if net capital income taxes used for pure redistribution are zero in a long-run optimum. I find that capital income taxes may be nonzero, depending on the political power of those who receive redistributive transfers, the distribution of pre-tax factor incomes, and the intertemporal elasticity of substitution.
Subjects:Growth
Redistribution
Investment Subsidies
Capital Income Taxes
JEL:O41
H21
D33
Document Type:Working Paper
Appears in Collections:Darmstadt Discussion Papers in Economics, Inst. f. VWL, TU Darmstadt

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