Change-Over within Little Scope: On the Decision Neutrality of Recent Tax Reform Proposals

48 Pages Posted: 9 Jan 2011

See all articles by Lars H.R. Siemers

Lars H.R. Siemers

University of Siegen

Daniel Zöller

Heidelberg University - Faculty of Economics and Social Studies

Date Written: January 7, 2011

Abstract

Political economy aspects make progressive income taxation and taxation of capital income imperative in practise. International tax competition and profit shifting, in turn, put pressure on corporate and capital taxes. Hence, the scope for a politically feasible change-over to a status of improved taxation is little. We provide an extended dynamic general equilibrium model and analyze politically feasible recent reform proposals referring neutrality. We then propose an alternative tax reform that, in contrast to these proposals, guarantees even growth neutrality, without necessarily jeopardizing political feasibility.

Keywords: Dynamic general equilibrium models, taxation, tax reform, decision neutrality, ACE, dual income tax

JEL Classification: H21, H24, H25, D58

Suggested Citation

Siemers, Lars H.R. and Zöller, Daniel, Change-Over within Little Scope: On the Decision Neutrality of Recent Tax Reform Proposals (January 7, 2011). Available at SSRN: https://ssrn.com/abstract=1736466 or http://dx.doi.org/10.2139/ssrn.1736466

Lars H.R. Siemers (Contact Author)

University of Siegen ( email )

Department of Economics
Hoelderlinstr. 3
Siegen, 57068
Germany

HOME PAGE: http://sites.google.com/site/lhsiemers/

Daniel Zöller

Heidelberg University - Faculty of Economics and Social Studies ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

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