Intangible investment and Ramsey capital taxation

Conesa, Juan C. and Domínguez, Begoña (2013) Intangible investment and Ramsey capital taxation. Journal of Monetary Economics, 6 8: 983-995. doi:10.1016/j.jmoneco.2013.09.004

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Author Conesa, Juan C.
Domínguez, Begoña
Title Intangible investment and Ramsey capital taxation
Journal name Journal of Monetary Economics   Check publisher's open access policy
ISSN 0304-3932
1873-1295
Publication date 2013-11-01
Sub-type Article (original research)
DOI 10.1016/j.jmoneco.2013.09.004
Open Access Status
Volume 6
Issue 8
Start page 983
End page 995
Total pages 13
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Language eng
Formatted abstract
Highlights
• Optimal taxation in a general equilibrium model with tangible and intangible capital.
• The optimal long-run policy features zero corporate taxes and positive dividend taxes.
• Optimal dividend and labor taxes are identical in the long run.
• The initial capital levy is relatively small.

The standard analysis of optimal fiscal policy aggregates different types of assets into a unique capital good and all types of capital taxes into a unique capital tax. This paper considers a disaggregated framework: an economy with corporate and dividend taxes, where firms invest in both tangible and intangible assets (which can be expensed or sweat). In our setup, firms can always respond to changes in the timing of taxation. We find that the optimal long-run policy features zero corporate taxes and positive dividend taxes, with labor and dividend taxes being identical. Moreover, the initial capital levy is relatively small.
Keyword Optimal policy
Capital taxation
Intangible assets
Time-consistency
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2014 Collection
School of Economics Publications
 
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Created: Wed, 04 Dec 2013, 01:27:03 EST by Alys Hohnen on behalf of School of Economics