Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26202 
Year of Publication: 
2007
Series/Report no.: 
CESifo Working Paper No. 2158
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
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.
Subjects: 
rent taxes
capitalization
transitional dynamics
labor supply
asset prices
JEL: 
H22
E62
F02
Document Type: 
Working Paper
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