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  • School of Business, Economics and Law / Handelshögskolan
  • Department of Economics / Institutionen för nationalekonomi med statistik
  • Working papers
  • Redigera dokument
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Social Comparisons and Optimal Taxation in a Small Open Economy

Sammanfattning
Almost all previous studies on optimal taxation and status consumption are based on closed model-economies. This paper analyzes how international capital mobility – which may constrain the use of capital income taxation – affects the optimal redistributive income tax policy in a small open economy when consumers care about their relative consumption. If the government can perfectly observe (and tax) returns on savings abroad, it is shown that the policy rules for marginal labor and capital income taxation derived for a closed economy largely carry over to the small open economy analyzed here. However, if these returns are unobserved by the government, the marginal tax policy rules will be very different from those pertaining to closed model-economies. In this case, capital income taxes on domestic savings will be completely ineffective, since such taxes would induce the consumers to move their savings abroad. The labor income tax must then indirectly also reflect the corrective purpose that the absent capital income tax would otherwise have had.
Övrig beskrivning
JEL: D03, D60, D62, F21, H21, H23
URL:
http://hdl.handle.net/2077/44418
Samlingar
  • Working papers
Fil(er)
gupea_2077_44418_1.pdf (550.9Kb)
Datum
2016-05
Författare
Aronsson, Thomas
Johansson-Stenman, Olof
Sjögren, Tomas
Nyckelord
Optimal taxation
relative consumption
positional goods
capital mobility
small open economy
Publikationstyp
report
ISSN
1403-2465
Serie/rapportnr.
Working Papers in Economics
658
Språk
eng
Metadata
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