dc.contributor.author | TRABANDT, Mathias | |
dc.date.accessioned | 2007-12-14T08:48:36Z | |
dc.date.available | 2007-12-14T08:48:36Z | |
dc.date.issued | 2007 | |
dc.identifier.issn | 1725-6704 | |
dc.identifier.uri | https://hdl.handle.net/1814/7662 | |
dc.description.abstract | Domeij and Klein (2005) have shown that the welfare gains of an optimal capital and labor income tax reform decline the longer the reform is pre-announced before its implementation. In other words, pre-announcement is costly in terms of welfare. I reexamine their claim by taking two additional features of government spending into account: public goods and public capital. In my baseline optimal reform, I show that valuable and productive government spending is likely to reduce the welfare costs of pre-announcement. Further, the baseline optimal pre-announced reform displays short-run confiscation and/or subsidy of capital and labor income. As a further contribution, I show that these short-run properties are not important for the welfare gains of pre-announced reforms with sufficiently long pre-announcement duration. In particular, a 4 years pre-announced suboptimal reform in which taxes move - without confiscation and subsidy - directly to their endogenous long-run values at the implementation date generates similar welfare gains as the 4 years preannounced baseline optimal reform. The underlying tax structure of both reforms, however, appears to be very different. | en |
dc.format.mimetype | application/pdf | |
dc.language.iso | en | en |
dc.publisher | European University Institute | |
dc.relation.ispartofseries | EUI ECO | en |
dc.relation.ispartofseries | 2007/52 | en |
dc.rights | info:eu-repo/semantics/openAccess | |
dc.subject | pre-announced optimal tax reform | en |
dc.subject | public goods | en |
dc.subject | public capital | en |
dc.subject | confiscation | en |
dc.subject | subsidy | en |
dc.subject | welfare | en |
dc.subject | E0 | en |
dc.subject | E6 | en |
dc.subject | H0 | en |
dc.title | Optimal Pre-Announced Tax Reform Revisited | en |
dc.type | Working Paper | en |
dc.neeo.contributor | TRABANDT|Mathias|aut| | |
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