Capital Tax as a Consequence of Bargaining

Saito, Yuta (2015): Capital Tax as a Consequence of Bargaining.

Abstract

We study an OLG model in which heterogenous agents bargain over capital taxation. In our model, both of the balance of bargaining power and threat point, that standard median voter models have not considered, are endogenized. We show that the two key features are crucial determinants for political as well as economic outcomes.

• Item Type: MPRA Paper
• Language: English
• Keywords: Legislative bargaining; wealth inequality; capital taxation
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; P - Economic Systems > P4 - Other Economic Systems > P48 - Political Economy ; Legal Institutions ; Property Rights ; Natural Resources ; Energy ; Environment ; Regional Studies

References

David P Baron. A dynamic theory of collective goods programs. American Political Science Review, 90(02):316–330, 1996.

David P Baron and John A Ferejohn. Bargaining in legislatures. American political science review, 83(04):1181–1206, 1989.

Marco Bassetto. Political economy of taxation in an overlapping-generations econ- omy. Review of Economic Dynamics, 11(1):18–43, 2008.

Allan H Meltzer and Scott F Richard. A rational theory of the size of government. The Journal of Political Economy, pages 914–927, 1981.

Facundo Piguillem and Alessandro Riboni. Dynamic bargaining over redistribution in legislatures. EIEF Working Paper Series, (1206), 2013.

Thomas Piketty. Capital in the twenty-first century. Belknap Press, 2014.

Ariel Rubinstein. Perfect equilibrium in a bargaining model. Econometrica: Journal of the Econometric Society, pages 97–109, 1982.