Income Tax Incidence with Positive Population Growth

Abstract:     
This paper derives the incidence of linear taxes on capital and labor in a competitive equilibrium in balanced growth. The paper further considers a tax on consumption and a tax credit. Tax incidence is determined using an analytic expression for the saving rate out of income net of all taxes and credits. Results for zero population growth do not extend to positive population growth, where the incidence of a tax on interest income is positive and a tax on consumption reduces the interest rate.

Number of Pages in PDF File: 21

Keywords: Income tax, incidence, consumption tax, tax credit, distribution

JEL Classification: H22, H24, E25, D33

working papers series