Dynamic Fiscal Solvency with Consumption and Capital Taxes

• Autorzy: Janusz Kudła , Katarzyna Kopczewska , Agata Kocia , Robert Kruszewski , Konrad Walczyk
• 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)

Słowa kluczowe

EN

Dynamic model; Consumption taxation; Financial solvency; Taxes

PL

Model dynamiczny; Opodatkowanie konsumpcji; Wypłacalność; Podatki

• Czasopismo: Ekonomia / Uniwersytet Warszawski
• Rocznik: 2018
• Tom: 5
• Numer: nr 52
• Strony: 96--108

Twórcy

autor

Janusz Kudła

• University of Warsaw, Poland

autor

Katarzyna Kopczewska

• University of Warsaw, Poland

autor

Agata Kocia

• University of Warsaw, Poland

autor

Robert Kruszewski

• Warsaw School of Economics, Poland

autor

Konrad Walczyk

• Warsaw School of Economics, Poland

Bibliografia

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• [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.

Identyfikatory

DOI

https://doi.org/10.1515/ceej-2018-0013