Felder, Stefan:
Tax Reform in a Two-Class Growth Model
1997
In: Empirical Economics, Band 22 (1997), S. 273 - 291
Artikel/Aufsatz in Zeitschrift / Fach: Wirtschaftswissenschaften
Titel:
Tax Reform in a Two-Class Growth Model
Autor(in):
Felder, Stefan im Online-Personal- und -Vorlesungsverzeichnis LSF anzeigen
Erscheinungsjahr
1997
Erschienen in:
Empirical Economics, Band 22 (1997), S. 273 - 291

Abstract:

This paper analyzes the welfare and distributional effects of tax reforms in a two-class model with exogenous labour supply. It extends the empirically calibrated, standard life-cycle model to include both pure life-cycle savers and households with an altruistic bequest motive. The tax reform simulations cover the move from an income to a wage and a consumption tax, respectively. The role of borrowing constraints is studied and a dynamic analysis of tax reforms using a static expectation approach is performed. The simulation results indicate that the two tax reforms have different impacts on the welfare of the two classes: while the pure life-cycle savers are better off with the consumption tax, the altruistically motivated households gain more under a wage tax. The results further show that while the introduction of a consumption tax is distributionally neutral, the move to a wage tax substantially increases income and wealth inequality.