Endogenous Taxation: An Overlapping Generations Approach

Renstrom, Thomas I.

Abstract

The paper develops an overlapping generations framework of endogenous taxation. There are three types of heterogeneity among individuals: age, productivity, and bequest motives. The heterogeneity gives rise to a redistributive conflict and therefore to different preferences over fiscal policy. Linear taxes are levied on consumption expenditure, wage income and capital income. These tax rates and the provision of a public good become endogenous through a majority-voting rule. The dynamic politico-economic equilibrium is examined both in and outside the steady state. The focus is on the underlying characteristics of the economy that gives rise to a particular fiscal structure.

Citation

Renstrom, T. I. (1996). Endogenous Taxation: An Overlapping Generations Approach. The Economic Journal, 106(435), 471-482. https://doi.org/10.2307/2235261

• Journal Article Type: Article
• Online Publication Date: Mar 1, 1996
• Publication Date: Mar 1, 1996
• Deposit Date: Feb 19, 2020
• Journal: The Economic Journal
• Print ISSN: 0013-0133
• Publisher: Oxford University Press
• Peer Reviewed: Peer Reviewed
• Volume: 106
• Issue: 435
• Pages: 471-482
• DOI: https://doi.org/10.2307/2235261
• Public URL: https://durham-repository.worktribe.com/output/1307399