
Optimal Capital Taxation Rates and Tax Competition in Open Economy
Optimal Capital Taxation Rates and Tax Competition in Open Economy
- Sé verine Menguy
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제33권 제4호
- 등재여부 : KCI등재
- 2018.12
- 722 - 772 (51 pages)
The model presented in this paper provides accurate theoretical results regarding optimal taxation rates and fiscal externalities in an open economy. We show that for both capital-importing and capital-exporting counties, capital taxation rates should increase with country size approximated by its capital stock. In parallel, for the smallest countries, the fiscal weight could be very high and strongly relies on the labor production factor. It is also demonstrated that the optimal capital taxation rate increases with the relative preference of the representative consumer for private consumption, in contrast to public consumption, as well as with the capital share in the production function. Furthermore, the presented model shows that the slope of the tax reaction function is positive as soon as the preference of the representative consumer for private goods consumption is sufficiently high.
Ⅰ. Introduction
Ⅱ. The Economics Literature
Ⅲ. The Model
Ⅳ. Optimal Taxation Rates
Ⅴ. Fiscal Externalities Regarding Capital Taxation Rates
Ⅵ. Conclusion