1. Judd (1985) and Chamley (1986) obtained results that in the long run, the optimal capital income taxation should be zero. And they claim that the result does not depend on whether government has the ability to borrow or not. 2. Lansing in this paper gave a counterexample under which the optimal capital income tax rate is non-zero in the long run when the government does not have the ability ...

Analyzing a homogenous household setting with endogenous fertility and endogenous labor supply, we demonstrate that moving from joint taxation to individual taxation and adapting child benefits so as to keep fertility constant entails a Pareto improvement. The change is associated with an increase in labor supply and consumption and a reduction of the marginal income tax, while the child benefi...

PURPOSE Different countries have different goals for social welfare policy. Consequently, it is reasonable to expect different outcomes after certain events. This article examines changes in the economic well-being of elderly women at widowhood in the United States and Germany. DESIGN AND METHODS Longitudinal data from the U.S. Panel Study of Income Dynamics and the German Socioeconomic Panel...

To encourage home ownership, the United States tax code treats the financing and sale of housing differently from most other goods. For example, the interest payments on your home mortgage and your property taxes are deduct-ible from your federal income taxes while the interest on your credit card bill for your vacation to Paris is not. Furthermore, the profit you make on the sale of your house...

The Supplemental Security Income (SSI) program, established by the Social Security Amendments of 1972 (Public Law 92-603), was designed to provide cash assistance to needy aged, blind, and disabled citizens, and noncitizens lawfully admitted for permanent residence or permanently residing under color of law. Since then, this means-tested program has undergone many legislative changes that affec...

This study examines how variations in states’ corporate income tax regimes affect new capital investment by business. Using U.S. state-aggregated data from 1983 to 1996, we find in pooled and fixed-effects regressions that new capital expenditures by corporations in the manufacturing sector are decreasing in the income tax burden on property (measured as the product of the statutory tax rate an...

Since 1942, Canada’s Income Tax Act has provided tax relief to taxpayers who spend substantial amounts of their income on out-of-pocket medical expenses. Since 1988, this relief comes in the form of a tax credit, an amount that is directly deductible against income tax payable. Not all medical expenses are eligible. In particular, the statutory scheme excludes some, but not all, medical service...

The Atkinson-Stiglitz Theorem shows that with weakly separable preferences, differential commodity taxes are not needed if an optimal nonlinear income tax is imposed. Redistributive objectives can be achieved with the income tax alone even if goods differ considerably in their income elasticities of demand. Deaton showed that if the government is restricted to a linear progressive income tax al...