Optimal taxation and OECD labor taxes

• 成果类型: Article
• 署名作者: Scott, Andrew
• 署名单位: University of London; London Business School
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2006.01.006
• 发表日期: 2007
• 页码: 925-944
• 关键词: bond markets; fiscal policy; incomplete markets; optimal taxation; Tax smoothing

摘要

We derive simple expressions for optimal labor taxes under different assumptions about government bond markets. We use these to examine OECD labor taxes, estimate the excess burden of taxation and assess the ability of optimal tax models to match the data. Optimal labor taxes are driven by: (i) a term reflecting Ramsey considerations which makes labor taxes vary positively with employment and (ii) a martingale component, reflecting the excess burden of tax, which shows persistent responses to shocks to the government's intertemporal budget constraint. Under complete markets (when governments can issue a full set of contingent securities) only the first factor is relevant. We find substantial evidence that incorporating incomplete markets into the optimal taxation model is critical for empirical success. However, we find strongest support for the martingale component and only weak evidence for the Ramsey component. (c) 2006 Elsevier B.V. All rights reserved.