Wempi Saputra   ''The Choice of Tax Bases under Fiscal Federalism and the Unitary System'' ( 2010, Vol. 30 No.1 )     This paper analyzes the governmentfs choice of three proportional tax bases (a consumption tax, a wage tax and a capital income tax) and its influence on the steady-state levels of capital accumulation and social welfare under fiscal federalism and the unitary system. We report two main findings: first, the system that uses a consumption and a capital income tax bases yields a higher steady state level of capital accumulation than that which uses a wage tax base. When each system uses the same tax base, then the steady state levels of capital accumulation under the two systems are equivalent. Second, the social welfare levels in fiscal federalism and the unitary system under a consumption tax base are equivalent if individualsf rate of time preference just equal to the interest rate, while the social welfare levels in the two systems under the wage and capital income tax bases are equivalent if and only if the rate of time preference is equal to the population growth rate.     Keywords: Tax base JEL: H2 - Taxation, Subsidies, and Revenue: General H1 - Structure and Scope of Government: General   Manuscript Received : Dec 05 2008   Manuscript Accepted : Jan 17 2010   This abstract has been downloaded 1725 times                The Full PDF of this paper has been downloaded 159944 times