On the consequences of eliminating capital tax differentials

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Slavik, Ctirad and Yazıcı, Hakkı (2014) On the consequences of eliminating capital tax differentials. [Working Paper / Technical Report] Sabanci University ID:UNSPECIFIED

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In the United States structure and equipment capital are effectively taxed at different rates. Recently, President Obama joined the group of policy makers and economists who propose to eliminate these differentials. This paper analyzes the consequences of such a reform using an incomplete markets model with equipment-skill complementarity. We find that the reform increases average welfare by approximately 0.1 %. Importantly, we find that the reform does not involve the usual efficiency vs. equality trade-off: it improves both.

Item Type:Working Paper / Technical Report
Uncontrolled Keywords:Uniform capital tax reform, equipment capital, structure capital, equipment-skill complementarity
Subjects:H Social Sciences > HJ Public Finance
ID Code:24794
Deposited By:Hakkı Yazıcı
Deposited On:05 Dec 2014 22:41
Last Modified:02 Aug 2019 11:17

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