Labor and capital income taxation, fiscal competition, and the distribution of wealth

• 成果类型: Article; Proceedings Paper
• 署名作者: Fuest, C; Huber, B
• 署名单位: University of Munich
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/S0047-2727(00)00096-7
• 发表日期: 2001
• 页码: 71-91
• 关键词: optimum income taxation; wealth taxation; fiscal competition

摘要

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 shifting has taken place. It turns out that the optimal source tax on capital is negative. The optimal income tax is characterized by a positive marginal tax rate for the wealthy households, which is equal for labor income and income from wealth. For the poor households, the marginal tax rate on capital income is higher than that on labor income. We also study international tax coordination and show that a reduction in the source subsidy on capital raises welfare. (C) 2001 Elsevier Science B.V. All rights reserved.