Optimal fiscal policy leads to zero income tax in the long run.
The article analyzes how different types of government spending can impact economic growth in various models. It shows that certain fiscal policies can lead to improvements in the economy by reallocating resources rather than discouraging investment. The researchers explore scenarios where deficits can or cannot be sustained, and discuss optimal ways to finance public services. In the long run, it is found that user charges can cover the costs of public investments, making income tax unnecessary.