In this paper we analyse the stabilisation properties of distortionary taxes in a New Keynesian model with overlapping generations of finitely-lived consumers. In this framework, government debt is part of net wealth and this adds a number of interesting channels through which fiscal policy could affect output and inflation. Output volatility, in presence of technology shocks, is not substantia...

I quantitatively study the optimal capital income taxation in the general equilibrium overlapping generations model with uninsurable idiosyncratic income shocks and with housing and flnancial assets. Following key characteristics of housing are explicitly modeled: (i) housing is held for the dual purpose of consumption and savings, (ii) housing can be either owned or rented, (iii) if owned, hou...

The past academic literature on tax policy has focused almost entirely on the analysis of tax structures in the richest countries, particularly the U.S. Overall the optimal tax models explain reasonably well the observed tax policies in these countries. As summarized in Gordon (2000), for example, past theoretical work suggests that taxes on consumption or labor income should dominate use of ca...

We show in a two-period world with endogenous savings and two assets, one of them exhibiting a stochastic return that an interest adjusted income tax is optimal. This tax leaves a safe component of interest income tax free and taxes the excess return with a special tax rate. There is no trade off between risk allocation and efficiency in intertemporal consumption. Both goals are reached. As the...

Chapter Outline Designing Broad-Based Taxes: The Economic Objectives 171 Ability to Pay: Theoretical Considerations 173 Two Preliminary Considerations 173 Horizontal Equity 174 From Horizontal Equity to the Ideal Tax Base 174 The Three Principles of Tax Design 174 People Bear the Tax Burden 174 Individuals Sacrifice Utility 174 The Ideal Tax Base as the Best Surrogate Measure of Utility 175 Hai...

The paper summarizes the arguments in favor of a shift from comprehensive to dual income taxation and complements the discussion by an overview on tax reforms which reveal the characteristic features of a dual income tax system. The scope of our analysis is not restricted to the Nordic countries, we also include other European countries, whose tax reform steps can be regarded as a move toward a...

The past academic literature on tax policy has focused almost entirely on the analysis of tax structures in the richest countries, particularly the U.S. Overall the optimal tax models explain reasonably well the observed tax policies in these countries. As summarized in Gordon (2000), for example, past theoretical work suggests that taxes on consumption or labor income should dominate use of ca...

This paper studies optimum income taxation in a small open economy where households differ with respect to their endowments with wealth. The government raises taxes on income from labor and wealth and a source tax on capital used in domestic production. To avoid taxes, households may, at some cost, shift capital to labor income and vice versa. The government can only observe income after shifti...

The vast increase in foreign assets globally has raised interest in how the home country should tax profits flowing from these investments. Broadly speaking, countries have chosen either to exempt foreign income from taxation or to subject foreign income to taxation with credits/deductions given for foreign taxes paid. Recent research has focused on the effect of these foreign income tax rules ...

This paper investigates the impact of sugar-sweetened beverages (SSB) taxes on consumption, bodyweight and tax burden for low-income, middle-income and high-income groups using an Almost Ideal Demand System and 2011 Household level scanner data. A significant contribution of our paper is that we compare two types of SSB taxes recently advocated by policy makers: A 20% flat rate sales (valoric) ...