Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation

This paper studies optimal capital and labor income taxes when the benefits of public goods are age-dependent. Provided the government can impose a consumption tax, it can attain the first-best resource allocation. This involves the uniform taxation of the cohorts' labor income and a zero capit...

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Main Authors:	Iqbal, Kazi, Turnovsky, Stephen J.
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Taxation and Subsidies: Efficiency Optimal Taxation H210 Personal Income and Other Nonbusiness Taxes and Subsidies includes inheritance and gift taxes H240 Business Taxes and Subsidies including sales and value-added (VAT) H250 Public Goods H410 National Government Expenditures and Related Policies: General H500 National Budget Budget Systems H610
Online Access:	http://hdl.handle.net/10986/5868

id	okr-10986-5868
recordtype	oai_dc
spelling	okr-10986-58682021-04-23T14:02:23Z Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation Iqbal, Kazi Turnovsky, Stephen J. Taxation and Subsidies: Efficiency Optimal Taxation H210 Personal Income and Other Nonbusiness Taxes and Subsidies includes inheritance and gift taxes H240 Business Taxes and Subsidies including sales and value-added (VAT) H250 Public Goods H410 National Government Expenditures and Related Policies: General H500 National Budget Budget Systems H610 This paper studies optimal capital and labor income taxes when the benefits of public goods are age-dependent. Provided the government can impose a consumption tax, it can attain the first-best resource allocation. This involves the uniform taxation of the cohorts' labor income and a zero capital income tax. With no consumption tax and optimally chosen government spending, labor income should be taxed nonuniformly across cohorts and the capital income tax should be nonzero. Deviations of the public goods from their respective optima create distortions. These affect the labor supply decisions of both cohorts and capital accumulation, providing a further reason to tax (or subsidize) capital income. 2012-03-30T07:34:56Z 2012-03-30T07:34:56Z 2008 Journal Article Journal of Public Economic Theory 10973923 http://hdl.handle.net/10986/5868 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Taxation and Subsidies: Efficiency Optimal Taxation H210 Personal Income and Other Nonbusiness Taxes and Subsidies includes inheritance and gift taxes H240 Business Taxes and Subsidies including sales and value-added (VAT) H250 Public Goods H410 National Government Expenditures and Related Policies: General H500 National Budget Budget Systems H610
spellingShingle	Taxation and Subsidies: Efficiency Optimal Taxation H210 Personal Income and Other Nonbusiness Taxes and Subsidies includes inheritance and gift taxes H240 Business Taxes and Subsidies including sales and value-added (VAT) H250 Public Goods H410 National Government Expenditures and Related Policies: General H500 National Budget Budget Systems H610 Iqbal, Kazi Turnovsky, Stephen J. Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	This paper studies optimal capital and labor income taxes when the benefits of public goods are age-dependent. Provided the government can impose a consumption tax, it can attain the first-best resource allocation. This involves the uniform taxation of the cohorts' labor income and a zero capital income tax. With no consumption tax and optimally chosen government spending, labor income should be taxed nonuniformly across cohorts and the capital income tax should be nonzero. Deviations of the public goods from their respective optima create distortions. These affect the labor supply decisions of both cohorts and capital accumulation, providing a further reason to tax (or subsidize) capital income.
format	Journal Article
author	Iqbal, Kazi Turnovsky, Stephen J.
author_facet	Iqbal, Kazi Turnovsky, Stephen J.
author_sort	Iqbal, Kazi
title	Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
title_short	Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
title_full	Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
title_fullStr	Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
title_full_unstemmed	Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation
title_sort	intergenerational allocation of government expenditures : externalities and optimal taxation
publishDate	2012
url	http://hdl.handle.net/10986/5868
_version_	1764396598338519040

Intergenerational Allocation of Government Expenditures : Externalities and Optimal Taxation

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