Physical capital taxation and labor income taxation in an endogenous growth model with new generations |
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Authors: | Chi-Ting Chin Ching-Chong Lai |
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Institution: | (1) Institute of Economics, Academia Sinica, Nankang, Taipei, 115, Taiwan;(2) Department of Economics, Feng Chia University, Seatwen, Taichung, 407, Taiwan |
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Abstract: | This paper examines the growth and welfare effects of physical capital taxation and labor income taxation. It is found that
the impact of a rise in the physical capital tax rate on the balanced growth rate is crucially related to the birth rate,
but a rise in the labor income tax rate definitely reduces the balanced growth rate regardless of the birth rate. It is also
found that an increase in the physical capital income tax rate will harm the older but will benefit the younger, while an
increase in the labor income tax rate will benefit the older but will harm the younger.
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Keywords: | Overlapping generations Physical capital taxation Labor income taxation |
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