Marginal Effective Tax Rates on Physical, Human and R & D Capital
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Published: 1998
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Published: 1998
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DOWNLOAD EBOOKAuthor: Kathryn Gordon
Publisher:
Published: 2003
Total Pages: 0
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DOWNLOAD EBOOKThis paper presents marginal effective tax rates (METRs) for a number of physical and intangible assets and for a number of funding sources. The assets include machinery, buildings, inventories, investments in short-lived R&D (that is, investments whose returns last only a few years) and firm-sponsored training and household-sponsored tertiary education. The calculations incorporate parameters from both the personal and corporate tax codes. They are performed for the "top-bracket" taxpayer and for the "average production worker" and cover between 15 and 22 countries, depending on data availability. The OECD has already used the King-Fullerton method to calculate METRs for physical capital (OECD, 1991) and this paper updates these calculations using established practices. As the method has not yet been applied to household-sponsored human capital, the paper describes the extension to this type of investment in some detail. The international averages for the METRs show that intangible capital generally receives more favourable tax treatment than physical capital. On average, the most favoured investment category is short-lived R&D. Household-sponsored human capital also receives favourable treatment. However, this stems from mainly direct subsidies given in the form of scholarships or below-cost charging for public education; the tax system itself tends to offset the incentive effects of direct subsidies. Firm-sponsored training also receives favourable treatment compared to that accorded to physical capital.
Author: Kathryn Gordon
Publisher:
Published: 1998
Total Pages: 31
ISBN-13:
DOWNLOAD EBOOKAuthor: Kathryn Gordon
Publisher:
Published: 1998
Total Pages: 40
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DOWNLOAD EBOOKInvestigates the marginal incentives created by tax treatment of domestic investment in human capital accumulation undertaken by firms and households and in innovative capital acquired through research and development. Includes comparable measures of tax incentives for investment in physical capital.
Author: Mervyn A. King
Publisher: University of Chicago Press
Published: 2010-06-15
Total Pages: 361
ISBN-13: 0226436314
DOWNLOAD EBOOKTaxation—both corporate and personal—has been held responsible for the low investment and productivity growth rates experienced in the West during the last decade. This book, a comparative study of the taxation of income from capital in the United States, the United Kingdom, Sweden, and West Germany, establishes for the first time a common framework for analysis that permits accurate comparison of tax systems.
Author: Larry E. Jones
Publisher:
Published: 1993
Total Pages: 56
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DOWNLOAD EBOOKOne of the best known results in modern public finance is the Chamley-Judd result showing that the optimal tax rate on capital income is zero in the long-run. In this paper, we reexamine this result by analyzing a series of generalizations of the Chamley-Judd formulation. We show that in a model with human capital, if the tax code is sufficiently rich and there are no pure profits from accumulating human capital, then all distorting taxes are zero in the long-run under the optimal plan. In this sense, income from physical capital is not special. To gain a better understanding of these two conditions, we study examples in which they are not satisfied and show that the optimal tax rate on income from physical capital does not go to zero. In those cases where the limiting tax rate is non-zero, we calculate its value for alternative specifications of the marginal welfare cost of taxation. Our results indicate that even for conservative specifications, tax rates of 10% and higher are possible under the optimal code.
Author: Timothy P. Roth
Publisher:
Published: 1982
Total Pages: 36
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DOWNLOAD EBOOKAuthor: Kirk A. Collins
Publisher:
Published: 2004
Total Pages: 0
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DOWNLOAD EBOOKThis body of work contains four essays. The first three use a novel approach to measuring the impact that taxation has on individuals' incentive to invest in human capital; specifically, a university education. The final essay uses the results from the first three to explore the capital levy problem in a new light. Using the framework for effective marginal tax rates (EMTRs) on physical capital, a conceptual framework is developed for measuring similar rates on human capital. Unlike their physical capital counterpart, effective tax rates (ETRs) on human capital are not measured at the margin, but rather are based on the next level of education attainment (e.g. high school vs. university/college). The reason, which is explained in detail, is that the lumpiness of human capital investment matters, unlike for physical capital. Results show that the progressivity of personal income taxation plays a large role in human capital ETRs, as do non-tax policy instruments (e.g. registered education savings plans, tuition and other direct costs to education, education allowances, etc.). Human capital ETRs are nonuniform, like their EMTR cousins, but are lower in magnitude. The results also support the view that the tax structure may influence the incentive for highly educated Canadians to seek employment in the United States, mitigating the brain drain phenomenon. The final essay looks at the capital levy problem. If capital investments are irreversible, governments can tax these items ex post with little (or no) deadweight loss. As a result, smart investors end up investing less in certain types of capital. In the end there is an underinvestment in capital. The problem with this view is that it only describes what happens in the case of physical capital investment. Given the importance of human capital in today's "knowledge-based" economy, it is imperative that the framework address both of these types of capital. A general equilibrium model is developed. Results support the view that it is more than wages alone that determine migration incentives; the structure of the tax system, public goods, adjustment costs, are all shown to play a role. Simulation results are also provided.
Author: Mr.Gian Milesi-Ferretti
Publisher: International Monetary Fund
Published: 1995-08-01
Total Pages: 42
ISBN-13: 1451955790
DOWNLOAD EBOOKHarberger’s superneutrality conjecture contends that, although in theory the mix of direct and indirect taxes affects investment and growth, in practice growth effects of taxation are negligible. This paper provides evidence in support of this view by testing the predictions of endogenous growth models driven by human capital accumulation. The theoretical analysis highlights implications of different taxes for growth and investment in these models. The empirical work is based on cross-country regressions and numerical simulations, using a new methodology for estimating aggregate effective tax rates. Results show significant investment effects from income and consumption taxes that are consistent with small growth effects. The results are robust to the introduction of other growth determinants.
Author: Arnold C. Harberger
Publisher:
Published: 1969
Total Pages: 372
ISBN-13:
DOWNLOAD EBOOKCompilation of papers on problems of income taxation and the effects thereof on capital gains in the USA - covers economic implications, legal aspects of the tax system, fiscal policy, long term pattern of financing of enterprises, the effects of income taxation on labour force supply, etc., and includes statistical tables and information on personal income and investment. References.