Demographics and the politics of capital taxation in a life-cycle economy
Demographics and the politics of capital taxation in a life-cycle economy
This article studies the effects of demographics on the mix of tax rates on labour and capital. It uses a quantitative general-equilibrium overlapping-generations model where tax rates are voted without past commitments in every period and characterized as a Markov equilibrium. In the U.S., the younger voting-age population in 1990 compared to 1965 accounts for the observed decline in the relative capital tax rate between those two years. A younger population rises the net return to capital, leads voters to increase their savings, and results in a preference for lower taxes on capital
Conversely, ageing might increase capital taxation.
markov policies, demographic change, capital and labor taxation
University of Southampton
Mateos-Planas, Xavier
444f69bb-2ab3-4f56-be17-3f286f7700da
2009
Mateos-Planas, Xavier
444f69bb-2ab3-4f56-be17-3f286f7700da
Mateos-Planas, Xavier
(2009)
Demographics and the politics of capital taxation in a life-cycle economy
(Discussion Papers in Economics and Econometrics, 909)
Southampton, UK.
University of Southampton
48pp.
Record type:
Monograph
(Discussion Paper)
Abstract
This article studies the effects of demographics on the mix of tax rates on labour and capital. It uses a quantitative general-equilibrium overlapping-generations model where tax rates are voted without past commitments in every period and characterized as a Markov equilibrium. In the U.S., the younger voting-age population in 1990 compared to 1965 accounts for the observed decline in the relative capital tax rate between those two years. A younger population rises the net return to capital, leads voters to increase their savings, and results in a preference for lower taxes on capital
Conversely, ageing might increase capital taxation.
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Published date: 2009
Keywords:
markov policies, demographic change, capital and labor taxation
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Local EPrints ID: 71047
URI: http://eprints.soton.ac.uk/id/eprint/71047
ISSN: 0966-4246
PURE UUID: 8eeb3108-0974-4612-b99a-f003152acb2d
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Date deposited: 13 Jan 2010
Last modified: 13 Mar 2024 20:19
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Author:
Xavier Mateos-Planas
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