On the marginal excess burden of taxation in an overlapping generations model

We extend marginal excess burden (MEB) analysis in public finance literature to a dynamic general equilibrium model with incomplete markets and heterogeneous households. This extension allows us quantitatively assess efficiency ranking incidence of taxes. Our results indicate disparity welfare cost distributional consequence different forms taxation on capital, labor consumption. According our MEB ranking, capital income appears be least efficient as it larger burdens, compared tax consumption tax. The shows variation burdens across households, depending their age, type generation. In particular, older households higher bear the highest company tax; meanwhile, future born personal Hence, demonstrates fruitful approach better understanding reforms one unified framework.