I take a new look at the long-run implications of taxation through the lens of modern Schumpeterian growth theory. I focus on the latest vintage of models that sterilize the scale effect through a process of product proliferation that fragments the aggregate market into submarkets whose size does not increase with the size of the workforce. I show that the following interventions raise welfare:...

We consider the joint effect of profit and Pigouvian taxation in a model of imperfect competition. We show that, when both profit taxation and Pigouvian taxation/subsidy are used, the former is no longer neutral. The two fiscal tools are substitutes, and for any profit taxation rate there exists a unique Pigouvian tax that entails the first best outcome as an equilibrium. Our analysis therefore...

Using the self-selection approach to tax analysis within an OLG framework, the paper examines optimal non-linear labour and capital income taxation and the provision of a durable public good. Under endogenous wages, the marginal tax rules depend on the influence of the tax instruments on self-selection and on the income earning abilities of the households. In particular, we found that productio...

In this study we investigate the economic effects of carbon taxes on the Russian economy. The main findings of this study are the following: an introduction of carbon taxes compensated by an increase in lump-sum subsidies may weak the Russian economy through higher energy costs. Moreover, such an environmental tax reform could induce Dutch disease in Russia because of increases in the domestic ...

The Taxpayer Relief Act of 1997 (TRA97) significantly changed the tax treatment of housing capital gains in the United States. Before 1997, homeowners were subject to capital gains taxation when they sold their houses unless they purchased replacement homes of equal or greater value. Since 1997, homeowners can exclude capital gains of $500,000 (or $250,000 for single filers) when they sell thei...

Since Adam Smith, most economists have held that a professional army is superior to a conscript army, thanks to benefiting from comparative advantage and specialization. We summarize recent literature on the benefits and costs of military draft, with a special emphasis on its dynamic effects on human capital formation. Empirical evidence refutes the claim that the economic costs of the draft wo...

a r t i c l e i n f o We present a model of tax competition for real investment and profits and show that the presence of tax havens in some cases increases the tax revenue of countries. In the first part of the paper, we argue that tax competition for profits is likely to be imperfect in the sense that the jurisdiction with the lowest tax rate does not necessarily attract all shifted profits. ...

The paper analyses the impact of tax competition on innovation in the public sector. It is shown that the effects of increased mobility of the tax base on innovation and growth are ambiguous. The negative relationship is more likely, however. Moreover, it is shown that a Leviathan government may be induced to spend a larger share of its budget on unproductive activities. JEL codes: H21, H7, O31...

We show that in models in which labor services are supplied jointly with human capital, the Chamley and Judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale. Moreover, for a class of widely used preferences, consumption taxes are zero in the limit as well. However, we show by the construction of two ex...

This paper studies how frictions, both real and financial, interact with capital tax policy in a dynamic, general equilibrium model with heterogeneous firms. Comparative statics show that tax policy can have substantially different effects depending upon the frictions present. Analytical and numerical exercises show that accounting for firm heterogeneity is important when evaluating the respons...