What do aggregate consumption Euler equations say about the capital income tax burden?
By: Casey B. Mulligan.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10262; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10262.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Capital levy -- Econometric models.; Consumption (Economics) -- Econometric models.; Capital market -- Econometric models.
Description: "Aggregate consumption Euler equations fit financial asset return data poorly.  But they fit the return on the capital stock well, which leads us to three empirical findings relating to the capital income tax burden.  First, capital taxation drives a wedge between consumption growth and the expected pre-tax capital return.  Second, capital taxation is the major distortion in the capital market, in the sense that most of the medium and long run deviations between expected consumption growth and the expected pre-tax capital return are associated with capital taxation.  Third, consumption growth appears to be pretty elastic to the after-tax capital return (i.e., capital is elastically supplied), even while it appears inelastic to returns on various financial assets.  Capital income taxes are passed on through reduced capital accumulation, or higher markups, or some combination"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/24/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.