Economics, Econometrics and Finance
4 years ago

Dynamic tax strategy boosts economy by balancing capital and labor taxes.

1 view
SSRN Electronic Journal
Optimal Factor Taxation Under Wage Bargaining - a Dynamic Perspective
Erkki Koskela, Leopold von Thadden

Paper Summary

The article explores how to best tax factors like capital and labor in a dynamic economic model with wage bargaining. It shows that using both capital and wage taxes is more effective than just one, especially in imperfect labor markets. This challenges the idea that a zero capital tax is always the best approach.

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