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| Author: | Garcia-Milá, T. Marcet, A. Ventura. E. |
| Title: | Supply side interventions and redistribution |
| Journal: | Economic Journal
2010 : MAR, VOL 120:543 p. 105-130 |
| Index terms: | taxation equilibrium analysis capital gains tax wealth PAY |
| Language: | eng |
| Abstract: | The effect on welfare of shifting the burden of capital income taxes is evaluated to labour taxes in dynamic equilibrium model heterogeneous agents and constant tax rates. The economy is calibrated and simulated; it is found that lowering capital taxes has two effects: it increases efficiency in terms of aggregate production and it redistributes wealth in favour of those agents with a low wage/ wealth radio. When the parameters of the model are calibrated to match the distribution of income in terms of the wage/ wealth ratio, the redistributive effect dominates, and agents with a high wage/ wealth ratio would experience a large loss in utility if capital income taxes were eliminated. |
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