Capital Taxation and Economic Performance

SFB International Tax Coordination Discussion Paper No. 24

14 Pages Posted: 27 May 2008

See all articles by Martin Zagler

Martin Zagler

University of Piemonte Orientale - Facoltà di Economia; Vienna University of Economics and Business - Department of Economics

Date Written: July 17, 2007

Abstract

A new technology is a bold new combination of production factors that potentially yields a higher level of total factor productivity. The optimal combination of input factors is unknown when an innovation is pursued. A larger targeted innovation may require a greater change in the optimal combination of production factors employed and increases volatility alongside with economic growth. We show that economic policy can interfere in this relationship with by adjusting source based capital income taxes.

Keywords: Economic Growth, Cycles, Innovation, Capital Taxation, Tax Coordination, Automatic Stabilizers

JEL Classification: H87, E32, O31, O41

Suggested Citation

Zagler, Martin, Capital Taxation and Economic Performance (July 17, 2007). SFB International Tax Coordination Discussion Paper No. 24, Available at SSRN: https://ssrn.com/abstract=1137561 or http://dx.doi.org/10.2139/ssrn.1137561

Martin Zagler (Contact Author)

University of Piemonte Orientale - Facoltà di Economia ( email )

Via Perrone, 18
Novara, 28100
Italy

Vienna University of Economics and Business - Department of Economics ( email )

Augasse 2-6
A-1090 Wien
Austria

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