Cuñat, Alejandro; Deak, Szabolcs; Maffezzoli, Marco - Centre for Economic Performance, LSE - 2008
A reduction in income tax rates generates substantial dynamic responses within the framework of the standard … neoclassical growth model. The short-run revenue loss after an income tax cut is partly - or, depending on parameter values, even … response of government revenue to tax cuts by a relevant amount. In our benchmark calibration, a reduction in the capital-income …