This paper analyzes the effects of a land rent tax on capital formation and foreign investment in a life-cycle small open economy with endogenous labor-leisure choices. The consequences of land taxation critically depend on how the tax proceeds are used by the government. A land tax depresses capital formation, crowds out foreign investment and increases national wealth and consumption when the land tax revenues are distributed as lump-sum payments. If the proceeds from land taxation are used to finance unproductive government expenditure, the land tax will be neutral in its effects on the capital stock, nonhuman wealth and labor. When the tax revenues are used to reduce labor taxes, the land rent tax spurs nonhuman wealth accumulation and ambiguously affects the capital stock and labor.

The Incidence of a Tax on Pure Rent in a Small Open Economy / Petrucci, Alberto. - In: JOURNAL OF PUBLIC ECONOMICS. - ISSN 0047-2727. - 90:(2006), pp. 921-933.

The Incidence of a Tax on Pure Rent in a Small Open Economy

PETRUCCI, ALBERTO
2006

Abstract

This paper analyzes the effects of a land rent tax on capital formation and foreign investment in a life-cycle small open economy with endogenous labor-leisure choices. The consequences of land taxation critically depend on how the tax proceeds are used by the government. A land tax depresses capital formation, crowds out foreign investment and increases national wealth and consumption when the land tax revenues are distributed as lump-sum payments. If the proceeds from land taxation are used to finance unproductive government expenditure, the land tax will be neutral in its effects on the capital stock, nonhuman wealth and labor. When the tax revenues are used to reduce labor taxes, the land rent tax spurs nonhuman wealth accumulation and ambiguously affects the capital stock and labor.
The Incidence of a Tax on Pure Rent in a Small Open Economy / Petrucci, Alberto. - In: JOURNAL OF PUBLIC ECONOMICS. - ISSN 0047-2727. - 90:(2006), pp. 921-933.
File in questo prodotto:
File Dimensione Formato  
2 Petrucci.2006.JPuE.pdf

Solo gestori archivio

Tipologia: Documento in Post-print
Licenza: DRM non definito
Dimensione 135.89 kB
Formato Adobe PDF
135.89 kB Adobe PDF   Visualizza/Apri
Pubblicazioni consigliate

Caricamento pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/3174
Citazioni
  • Scopus 11
  • ???jsp.display-item.citation.isi??? 11
social impact