Altruism , Incomplete Markets , and Tax Reform

@inproceedings{Fuster2007AltruismI,
  title={Altruism , Incomplete Markets , and Tax Reform},
  author={L Minerva Burgos Fuster and Ayşe · Imrohoro},
  year={2007}
}
We compute the welfare e¤ects of di¤erent revenue-neutral tax reforms that eliminate capital income taxation in a general equilibrium model calibrated to the U.S. economy. We …nd that the reform with the largest welfare gain is the one that eliminates all income taxation and increases the consumption tax to 35%. In our calibrated dynastic economy, 75% of the population alive at the time of the reform bene…t from it. Altruism plays an important role in this result. Individuals use intervivos… CONTINUE READING

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