Taxation, growth and welfare : Dynamic effects of Estonia's 2000 income tax act

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Title: Taxation, growth and welfare : Dynamic effects of Estonia's 2000 income tax act
Author: Funke, Michael ; Strulik, Holger
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 10/2003
Year of publication: 2003
Publication date: 10.10.2003
Published in: Published in Published in Finnish Economic Papers vol 19, no 1 (2006), pp. 25-38
Pages: 22 s.
Keywords: Viro; tulovero; uudistukset; mallit; hyvinvointi; suorat sijoitukset; siirtymätaloudet; talouskasvu; Bofit-kokoelma
JEL: H25; H32; O41; O52
Abstract: This paper analyses the long-run effects of Estonia s 2000 Income Tax Act with a dynamic general equilibrium model.Specifically, we consider the impact of the shift from an imputation system to one where companies only pay taxes on distributed profits.Balanced growth paths, transitional dynamics and welfare costs are computed. Our results indicate that the 2000 Income Tax Act leads to higher per capita income and investment, but lower welfare.A sensitivity analysis shows the results are rather robust. Keywords: growth, welfare, taxation, tax reform, Estonia JEL Classification: H25, H32, O41, O52
Rights: https://helda.helsinki.fi/bof/copyright


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