Abstract
We show that in models in which labor services are supplied jointly with human capital, the Chamley and Judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale. Moreover, for a class of widely used preferences, consumption taxes are zero in the limit as well. However, we show by the construction of two examples that these results no longer hold for certains types of restrictions on tax rates or if there are profits generated.Journal of Economic LiteratureClassification Numbers: E62, H21.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 93-117 |
| Number of pages | 25 |
| Journal | Journal of Economic Theory |
| Volume | 73 |
| Issue number | 1 |
| DOIs | |
| State | Published - Mar 1997 |
Bibliographical note
Funding Information:* We thank V. V. Chari, Ken Judd, Nick Bull, seminar participants at several places, two referees of this journal, and an associate editor for their comments and the National Science Foundation for financial support. Remaining errors are ours, of course.
