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| Author: | Rangazas, P. |
| Title: | Redistributive taxation in a simple life-cycle model. |
| Journal: | Economica
1989 : NOV, VOL. 56:224, p. 487-503 |
| Index terms: | TAXATION LIFE CYCLES |
| Language: | eng |
| Abstract: | In a model with overlapping generations of rich and poor life-cycle planners, there is no a priori case for dismissing capital as a base for redistribution. The single-household life-cycle model is extended in order to examine the effects of using labour versus capital income as a base for redistributive taxation. The decomposition into substitution and wealth effects helps to reveal the necessary and sufficient conditions on preferences required to produce the results that the long-run effects of labour taxation are independent of the labour supply elasticity. The state is characterized by a utility frontier whose slope will generally differ from one in the neighbourhood of a no-tax equilibrium. |
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