04. juni 2014

Peter Birch Sørensen får accepteret forskningsartikel i Journal of Public Economics

Peter Birch Sørensen (2014), Measuring the deadweight loss from taxation in a small open economy - A general method with an application to Sweden. Journal of Public Economics (in press).

Abstract: The paper develops a simple general equilibrium framework for calculating the marginal deadweight loss from taxation in a small open economy. The framework allows a decomposition of the deadweight loss from each tax instrument into the losses stemming from the contraction of the different tax bases. The paper describes a method of calibrating the model which exploits the links between the various factor supply elasticities implied by the standard life cycle model. It also presents a method of estimating effective tax rates that is consistent with optimising household and firm behaviour. To illustrate how the model works, it is calibrated to a data set for Sweden. The quantitative results indicate that more than half of the marginal deadweight loss from taxes on capital  may stem from their negative impact on the tax bases for labour income and consumption.