Details
| Original language | English |
|---|---|
| Pages (from-to) | 137-153 |
| Number of pages | 17 |
| Journal | Journal of Economic Behavior and Organization |
| Volume | 90 |
| Early online date | 8 May 2012 |
| Publication status | Published - Jun 2013 |
Abstract
We augment a standard tax model by concerns about tax equity: people get upset when labour is taxed more heavily than capital. Even the slightest concern for tax equity invalidates the common tenet that capital remains tax-exempt in small open economies. This holds for exogenous as well as for endogenous government expenditures and irrespective of whether concerns with tax equity only cause emotional discomfort or also impact on work incentives. If concerns with tax equity get more intense, the economy may choose higher taxes on labour and move to the downward sloped part of its Laffer curve. For endogenous government spending, stronger concerns with tax equity may lead to a larger size of the public sector.
Keywords
- Fairness, Justice, Policy mix, Taxation
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
- Business, Management and Accounting(all)
- Organizational Behavior and Human Resource Management
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In: Journal of Economic Behavior and Organization, Vol. 90, 06.2013, p. 137-153.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Tax structure and government expenditures with tax equity concerns
AU - Koenig, Tobias
AU - Wagener, Andreas
PY - 2013/6
Y1 - 2013/6
N2 - We augment a standard tax model by concerns about tax equity: people get upset when labour is taxed more heavily than capital. Even the slightest concern for tax equity invalidates the common tenet that capital remains tax-exempt in small open economies. This holds for exogenous as well as for endogenous government expenditures and irrespective of whether concerns with tax equity only cause emotional discomfort or also impact on work incentives. If concerns with tax equity get more intense, the economy may choose higher taxes on labour and move to the downward sloped part of its Laffer curve. For endogenous government spending, stronger concerns with tax equity may lead to a larger size of the public sector.
AB - We augment a standard tax model by concerns about tax equity: people get upset when labour is taxed more heavily than capital. Even the slightest concern for tax equity invalidates the common tenet that capital remains tax-exempt in small open economies. This holds for exogenous as well as for endogenous government expenditures and irrespective of whether concerns with tax equity only cause emotional discomfort or also impact on work incentives. If concerns with tax equity get more intense, the economy may choose higher taxes on labour and move to the downward sloped part of its Laffer curve. For endogenous government spending, stronger concerns with tax equity may lead to a larger size of the public sector.
KW - Fairness
KW - Justice
KW - Policy mix
KW - Taxation
UR - http://www.scopus.com/inward/record.url?scp=84877923880&partnerID=8YFLogxK
U2 - 10.1016/j.jebo.2012.04.019
DO - 10.1016/j.jebo.2012.04.019
M3 - Article
AN - SCOPUS:84877923880
VL - 90
SP - 137
EP - 153
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
SN - 0167-2681
ER -