The Redistributional Consequences of Tax Reform Under Financial Integration*
| Title: | The Redistributional Consequences of Tax Reform Under Financial Integration* |
|---|---|
| Authors: | Ayşe Kabukçuoğlu; Jel Codes E; Olivier Coibion; Matthias Kehrig; Enrique Martínez-garcía; Jacek Rothert |
| Contributors: | The Pennsylvania State University CiteSeerX Archives |
| Source: | http://www.dallasfed.org/assets/documents/institute/wpapers/2014/0188.pdf. |
| Publication Year: | 2014 |
| Collection: | CiteSeerX |
| Description: | I quantify the welfare effects of replacing the US capital income tax with higher labor income taxes under international financial integration using a two-country, heterogeneous-agent incomplete markets model calibrated to represent the US and the rest of the world. Short-run and long-run factor price dynamics are key: after the tax reform, interest rates rise less under financial openness than in autarky. Therefore, wealthy households gain less. Post-tax wages also fall less as a result of the faster capital accumulation, so the poor are hurt less. Hence, the distributional impacts of the reform are significantly dampened relative to autarky although a majority of households prefer the status quo. Aggregate welfare effect to the US is a permanent 0.2 % consumption equivalent loss under financial openness which is roughly 15 % of the welfare loss under autarky. |
| Document Type: | text |
| File Description: | application/pdf |
| Language: | English |
| Relation: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.643.8249; http://www.dallasfed.org/assets/documents/institute/wpapers/2014/0188.pdf |
| Availability: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.643.8249; http://www.dallasfed.org/assets/documents/institute/wpapers/2014/0188.pdf |
| Rights: | Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: | edsbas.C07036FD |
| Database: | BASE |