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2018 | 5 | nr 52 | 96--108
Tytuł artykułu

Dynamic Fiscal Solvency with Consumption and Capital Taxes

Warianty tytułu
Języki publikacji
EN
Abstrakty
EN
To finance public expenditure a government needs to raise revenue, which mainly comes from taxes and borrowings. During a financial crisis, however, financing of budget deficit is particularly difficult because of a rise in debt servicing costs that crowd out other expenses and raise the concern for government solvency. In extreme cases, governments are constrained to tax, as borrowing opportunities are strictly limited or unavailable. Still, governments can choose from tax menu options (income and consumption taxes), given the flexibility of the tax mix. This article presents a long-term dynamic model of fiscal solvency that shows the equilibrium the revenue maximising government can obtain with reasonable tax rates when capital income can be shifted and there are constraints on the consumption tax. Specifically, the solution predicts a positive level of bonds in the long-term equilibrium and the tax rates dependent positively on the abundance of the tax bases. (original abstract)
Rocznik
Tom
5
Numer
Strony
96--108
Opis fizyczny
Twórcy
  • University of Warsaw, Poland
  • University of Warsaw, Poland
autor
  • University of Warsaw, Poland
  • Warsaw School of Economics, Poland
  • Warsaw School of Economics, Poland
Bibliografia
  • [1] Boadway, Robin. 1979. "Long-Run Tax Incidence: A Comparative Dynamic Approach". Review of Economic Studies (46)3: 505-511.
  • [2] Léonard, Daniel and Ngo van Long. 1992. Optimal Control Theory and Static Optimization in Economics Cambridge: Cambridge University Press.
  • [3] Martinez-Vazquez, Jorge, Violeta Vulovic and Yongzheng Liu. 2011. "Direct versus indirect taxation: trends, theory, and economic significance". In: The Elgar Guide to Tax Systems eds. Emilio Albi and Jorge Martinez-Vazquez, 37-92. Edward Elgar Publishing.
  • [4] Pontryagin, Lev S., Vladimir G. Boltyanskii, Revaz V. Gamkrelidze and Evgenii F. Mishchenko. 1962. The Mathematical Theory of Optimal Processes New York: Interscience Publishers.
  • [5] Seierstad, Atle and Knut Sydsæter. 1987. Optimal Control Theory with Economic Applications New York: Elsevier North-Holland.
  • [6] Schättler, Heinz and Urszula Ledzewicz.2012. Geometric Optimal Control. Theory, Methods and Examples New York: Springer-Verlag.
  • [7] Strulik, Holger and Timo Trimborn. 2012. "Laffer Strikes Again: Dynamic Scoring of Capital Taxes". European Economic Review (56)6: 1180-1199.
  • [8] Wildasin, David E. 2011. "Fiscal Competition for Imperfectly-Mobile Labor and Capital: A Comparative Dynamic Analysis". Journal of Public Economics (95)11: 1312-1321.
Typ dokumentu
Bibliografia
Identyfikator YADDA
bwmeta1.element.ekon-element-000171585766

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