Arbeitspapier
Time-consistent consumption taxation
We characterise optimal tax policies when the government has access to consumption taxation and cannot credibly commit to future policies. We consider a neoclassical economy where factor income taxation is distortionary within the period, due to endogenous labour and capital utilisation and non-tax-deductibility of depreciation. Contrary to the case where only labour and capital income are taxed, the optimal time-consistent policies with consumption taxation are remarkably similar to their Ramsey counterparts. The welfare gains from commitment are negligible, while they are substantial without consumption taxation. Further, the welfare gains from taxing consumption are much higher without commitment.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 857
- Classification
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Wirtschaft
Fiscal Policy
Taxation and Subsidies: Efficiency; Optimal Taxation
- Subject
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fiscal policy
Markov-perfect policies
consumption taxation
variable capital utilisation
- Event
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Geistige Schöpfung
- (who)
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Laczo, Sarolta
Rossi, Raffaele
- Event
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Veröffentlichung
- (who)
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Queen Mary University of London, School of Economics and Finance
- (where)
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London
- (when)
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2018
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Laczo, Sarolta
- Rossi, Raffaele
- Queen Mary University of London, School of Economics and Finance
Time of origin
- 2018
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