Download This PaperCorrecting Harberger’s Primitive Capital Income Tax Theory
10 Pages Posted: 22 Feb 2014 Last revised: 29 Apr 2018
Date Written: February 20, 2014
Abstract
This paper revamps Harberger’s primitive tax theory and obtains completely different results. When his perfectly inelastic supply is corrected, his total net capital income is reduced. The existence of another industry forces the firm of the taxed industry, not the capital owners, to bear the brunt of the tax burden. When the firm has to pay the higher capital price, it hires less capital and labor and produces less output. When less is exported and imported, its relative price becomes lower.
Keywords: Tax, Capital, Tariff
JEL Classification: H22, H25
Suggested Citation: Suggested Citation
Choi, Hak, Correcting Harberger’s Primitive Capital Income Tax Theory (February 20, 2014). Available at SSRN: https://ssrn.com/abstract=2399278 or http://dx.doi.org/10.2139/ssrn.2399278
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