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Claudia Hermeling and Martin Barbie
''Optimal Taxation in a Simple Model of Human Capital Accumulation''
( 2006, Vol. 5 No.5 )
This paper studies optimal taxation in dynamic economies with a simple form of human capital accumulation as considered in Bull (1993). We show that in a Ramsey equilibrium along any balanced growth path, the taxes on wage income and (physical) capital income must be zero. Under the assumption on preferences of Bull (1993), we extend his result by showing that along a balanced growth all optimal taxes are necessarily zero.
JEL: E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General
H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Nov 08 2005 Manuscript Accepted : Feb 21 2006

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