This paper studies the optimal Pigouvian tax for correcting pollution when the government also uses distortionary taxes to raise revenues. When preferences are quasilinear in leisure and additive, the Pigovian tax can be separated from the Ramsey revenue-raising tax. We characterize the relationship between the Pigouvian tax and marginal social damages in a variety of circumstances. In a setting with homogeneous households, the Pigouvian tax exceeds marginal damages if goods have inelastic demands, and vice versa. When households are heterogeneous so taxes can be redistributive, the Pigouvian tax gives more weight to damages suffered by low-income persons. The analysis is extended to allow for costly abatement. In general corrective taxes have to be applied to both emissions and output of the polluting good.
This thesis aims to assess the impact of downward wage rigidities on optimal tax- ation. We study a dynamic general equilibrium neoclassical growth model for a one sector, cashless stochastic closed economy with an in nitely lived representative house- hold, a representative rm with a constant returns to scale technology, a government deciding how to nance its exogenous expenditures without access to lump sum taxes, and competitive markets. We conclude that the optimal labor income tax exhibits both a reactive and a precautionary nature. Regarding the reactive nature, when the wage rigidity is binding, labor taxes increase since it is possible to raise revenue without ad- ditional distortions. On the precautionary side, the expectation of a future constraint lowers labor taxes, which, in turn, decreases the wage that clears the labor market, thus loosening future constraints. In the nominal small open economy with downwardly rigid nominal wages and exogenous nominal exchange rates, we show that the same conclu- sions apply. Additionally, it is possible to use consumption taxes in such a way that the optimal capital control tax is zero for a broad family of instantaneous utility functions. Finally, we introduce a consumption tax that discriminates between the good produced in the domestic economy and the good produced abroad to show that downward wage rigidities and exogenous exchange rates are irrelevant if the correct policy is used. ; Esta tese pretende avaliar o impacto de rigidezes salariais decrescentes sobre a política scal óptima. Para tal, usamos um modelo dinâmico de equilibrío geral, concordante com a corrente neoclásica, para uma economia estocástica fechada, sem moeda, de horizonte temporal in nito com uma família representativa, uma empresa representativa que usa uma tecnologia com rendimentos constantes à escala num único sector, um governo que precisa de nanciar a sequência exógena de gastos sem ter acesso a impostos lump sum, e mercados competitivos. É possível concluir que o imposto óptimo sobre o rendimento do trabalho apresenta características reactivas e precautórias. No que respeita à vertente reactiva, quando a restrição salarial é activa, o imposto deve aumentar visto ser possível recolher mais receita sem introduzir distorções adicionais. Na vertente precautória, a ex- pectativa de uma restrição futura diminui o imposto, o que, por sua vez, reduz o salário que equilibra o mercado do trabalho, relaxando, desta forma, as restrições futuras. Para a pequena economia aberta nominal, com rigidez decrescente no salário nominal junta- mente com taxas de câmbio nominais exógenas, o mesmo resultado é obtido. Além disso, mostramos que é possível implementar impostos sobre o consumo tais que o imposto óptimo de controlo de capitais seja zero para uma variedade de funções utilidade instan- tâneas. Finalmente, introduzimos um imposto sobre o consumo que discrimina o bem doméstico do bem produzido no exterior para demonstrar que rigidezes decrescentes no salário nominal, juntamente com taxas de câmbio nominais exógenas, se tornam irrele- vantes para uma correcta utilização desta política.
I analyze international tax competition in a framework of dynamic optimal taxation for strategically competing governments. The global capital stock is determined endogenously as in a neo-classical growth model. With perfect commitment and a complete tax system (where all factors of production can be taxed), governments set their capital taxes so that the net return is equal to the social marginal product of capital. Capital accumulation thus follows the modified golden rule. This is independent of relative country size, capital taxes in other countries, and the degree of capital mobility. In contrast, with an exogenous capital stock returns on capital are pure rents and a government's ability to capture them is limited through capital flight, triggering a race to the bottom. With an endogenous capital stock, capital is an intermediate good and taxes on it are not used to raise revenues, but to implement the optimal capital stock. Even in a non-cooperative game it is thus not individually rational for governments to engage in tax competition. I provide a general proof that if the modified golden rule holds in a closed economy, then it also does in an open economy.
This paper explores the implications of gender-based income taxation in a noncooperative model of household behavior. In a first step, we show how gender-based taxes can act as Pigou taxes and correct the externality induced by a non-cooperative household equilibrium. We find that the first-best Pigou tax rules are solely determined by spouses' relative marginal rates of substitution between the public household good and private consumption. Breaking down this eneral rule into the primitives of themodel, the spouse with a comparative advantage in home production should be taxed at a higher rate. In a second step, we embed our non-cooperative framework in a standard second-best planning problem in which taxes serve a revenue-raising purpose. In thiscase, the optimal structure of differential taxation by gender is partly determined by a Ramsey-type inverse elasticity rule and partly by a Pigouvian tax element. We showthat these two forces work in opposite directions in determining whether men or women should be taxed at a higher rate, and that either one could be dominant, depending on the revenue-raising position of the government. This result is robust to the introduction of two groups of households that differ in their mode of decision-making, which can beeither cooperative or non-cooperative.
