Pakko, Michael R.; Gavin, William T.; Kydland, Finn E. - Society for Economic Dynamics - SED - 2005
because, for any given capital income tax rate, an increase in the inflation
rate raises the real pre-tax rate of return to … bond tax. Braun (1994) and McGrattan (1994) show that both the labor
tax and the capital income tax have large welfare …
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Chang (1995) considered the capital income tax, but also did not investigate the interaction with inflation.
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