A Case Against Zero Capital-Income Taxation

Darong Dai, Kunrong Shen, Ruihua Ma

PDF(325 KB)
PDF(325 KB)
Front. Econ. China ›› 2013, Vol. 8 ›› Issue (1) : 64-90. DOI: 10.3868/s060-002-013-0004-4
research-article

A Case Against Zero Capital-Income Taxation

Author information +
History +

Abstract

This paper develops a dynamic general equilibrium model to investigate the optimal level of capital income taxation in light of stochastic endogenous economic growth. Although endogenous human capital is incorporated into our model, we restrict our investigation to the issue of optimal physical capital income tax; and the labor supply is also endogenously determined. This paper proves that the optimal capital income tax should be zero provided exogenous government expenditure on production; however, capital income should be taxed if we consider endogenous government consumption.

Keywords

stochastic endogenous growth / endogenous labor supply / endogenous human capital / optimal capital income taxation / endogenous government consumption / governmental altruism

Cite this article

Download citation ▾
Darong Dai, Kunrong Shen, Ruihua Ma. A Case Against Zero Capital-Income Taxation. Front Econ Chin, 2013, 8(1): 64‒90 https://doi.org/10.3868/s060-002-013-0004-4

RIGHTS & PERMISSIONS

2014 Higher Education Press and Brill
PDF(325 KB)

Accesses

Citations

Detail

Sections
Recommended

/