Author : Chung Tran
Release : 2017
Genre :
Kind : eBook
Book Rating : /5 ( reviews)
Book Synopsis On the Marginal Excess Burden of Taxation in an Overlapping Generations Model by : Chung Tran
Download or read book On the Marginal Excess Burden of Taxation in an Overlapping Generations Model written by Chung Tran. This book was released on 2017. Available in PDF, EPUB and Kindle. Book excerpt: We quantify marginal excess burden, defined as the change in deadweight loss for an additional dollar of tax revenue, for different taxes. We use a dynamic general equilibrium, overlapping generations model featured with heterogeneous agents and a realistic structure of corporate finance and taxes. Our main results, based on an economy calibrated to Australian data, indicate that company taxes are more distorting than personal income and consumption taxes. Specifically, the marginal excess burden for the company income tax is 83 cents per dollar of tax revenue raised, compared to 34 cents and 24 cents for the personal income and consumption taxes, respectively. A broader analysis of more tax instruments confirm that the relatively larger excess burden of company taxes ultimately falls on households. Importantly, the marginal excess burden is distributed unevenly across skill types, generations and ages. This highlights political challenges when obtaining popular support for raising taxes. Hence, our analysis demonstrates that marginal excess burden can be a useful tool for evaluating both efficiency and distributional implications of a tax increase at the margin.
