Coordinating Capital Income Taxation Among a Subset of Countries

Tax competition among countries generally leads to inefficiently low tax rates on mobile tax bases like capital income. This should call for cooperative tax policies to be implemented, but as long as some countries do not take part in the cooperation the incentives for a subset of countries to undertake cooperative action may be limited. The outcome of such ''partial cooperation'' is derived within a linear-quadratic tax competition model, and the results suggest that positive, but insignificant welfare effects are to be reaped for the participating countries (the main benefits accruing to the countries not participating). The implications of these results for EU-policies on capital income taxation are briefly discussed.

Government Debt and Capital Accumulation in the Blanchard-Cass-Yaari OLG Model

It is shown that although government debt in principle has an ambiguous effect on the steady state capital stock in an OLG model of the Blanchard-Cass-Yaari variety, once stability of the steady state equilibrium is imposed there is an unambiguous negative relation between the level of government debt and the capital stock.OLG model, government debt, stability, capital accumulation

On the Possibility and Desirability of Taxing E-Commerce

Over the past decade the taxation of e-commerce has been widely discussed among politicians, tax law experts and economists. To put some perspective on this issue it is analyzed to what extent e-commerce can actually be taxed and the severity of the ensuing tax revenue losses following from future growth of e-commerce is discussed. Since the US and the EU cases differ substantially they are considered separately. Subsequently various arguments supporting the view that e-commerce should receive preferential tax treatment are considered. Although no firm recommendations can be provided some interesting topics for future research are suggested.E-commerce, commodity taxation, tax principles, revenue loss, preferential tax treatment, auditing

Long Run Effects of Employment and Payroll Taxes in an Efficiency Wage Model

In equilibrium models of unemployment, e.g. efficiency wage models, the level of unemployment generally depends on the level of taxes on labor (see. e.g. Johnson and Layard (1986) and Pisauro (1991)). Considering labor taxes levied on firms, the tax authorities may choose between employment and payroll taxes where the former is a head tax on the number of employees while the latter is a tax on the cost of labor to firms. Pisauro (1991) has shown in a short run efficiency wage model that the incidence of employment and payroll taxes generally differ and, in particular, that employment taxes lead to less wage restraint than payroll taxes. Extending his model to the long run by allowing for free entry and exit of firms we go one step further and consider whether changes in the composition of labor taxes, balancing the government budget, affect equilibrium unemployment in the long run. Our results reveat that, perhaps somewhat surprisingly given the result that payroll taxes lead to more wage restraint than employment taxes, that more extensive use of employment taxes instead of payroll taxes, balancing the government budget, increases the level of employment and decreases unemployment.Efficiency wages, long run, employment taxes, payroll taxes, tax equivalence