International Private Transfers and Optimal Tax Structure in Developing Economies
Journal Title: Review of Economics & Finance - Year 2016, Vol 6, Issue 1
Abstract
In this paper we examine the optimal tax structure for a developing economy with international inter-family transfers. Our analysis characterizes conditions to identify the main determinants of the design of both the commodity and income tax. We find that these determinants change depending on the signs and values of the direct and cross price elasticities. A benchmark result of the literature suggests that the aggregate level of consumption, the weighted tax burdens from consumption and the efficiency costs of commodity taxes are the main determinants of a commodity tax. Our analysis suggests additional determinants, such as the aggregate level of income, the socially weighted aggregate level of labor income and the weighted aggregate elasticity of the supply of labor and income. A similar conclusion is obtained for the determinants of the income tax. Our analysis also provides a rationale to limit the use of the commodity tax and to increase the size of the income tax on the tax structure of this economy.
Authors and Affiliations
Ikuho Kochi, Raúl Alberto Ponce Rodríguez
Keywords
Related Articles
- EP ID EP259296
- DOI -
- Views 82
- Downloads 0
Financial Deepening, Economic Growth and Corruption: The Case of Islamic Banking
As Islamic banking is becoming popular among bank customers, attempts are made in this study to examine the relationship between the corruption level and financial market deregulation, which causes financial deepening, u...
The Development of the Net Present Value (NPV) Rule – Religious Prohibitions and Its Evolution
This paper describes the development of the net present value (NPV) rule. Today, net present value is a globally accepted methodology for investment appraisal in companies. Compared to other management techniques, net pr...
A Potential Contradiction Between Economic Theory and Applied Finance
One of the basic premises that underlies economic theory in Finance is the assumption of declining marginal utility of income. This assumption imposes risk-aversion on the investors and is necessary requirement to an equ...
FDI and Economic Growth in the East African Community Trade Bloc: Panel Co-integration Evidence
Policymakers in the East African Community trade bloc have identified FDI attraction and retention among the priority areas for economic growth and development. This study uses annual data of the period 1970-2008 for a p...
Combining the Beveridge and the Phillips Curve into an Integrative Model: The Modified Output Gap
We present a new theoretical concept: modified output gap (MOG), based on the Phillips and on the Beveridge curve. Both of these pillars are derived analytically and combined with each other, revealing the explicit posit...