Arefiev, Nikolay and Baron, Tatyana (2006): Capital Taxation and Rent Seeking.
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We find the optimal capital income tax rate in an imperfectly competitive economy, where some part of recourses is devoted to rent-seeking activity. Optimal tax offsets the difference between marginal social and marginal private return to capital, which is a result of rent seeking, and the difference between the before tax interest rate and the marginal productivity of capital, which arises from imperfect competition. Optimal capital income tax rate depends neither on other tax rates nor on overall tax burden. Numerically it is close to zero.
|Item Type:||MPRA Paper|
|Original Title:||Capital Taxation and Rent Seeking|
|Keywords:||Capital taxation, rent seeking, imperfect competition|
|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 > H21 - Efficiency ; Optimal Taxation
|Depositing User:||N. G. Arefiev|
|Date Deposited:||14. Aug 2008 02:24|
|Last Modified:||12. Feb 2013 17:59|
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