Tax cuts should focus on income from capital, French paper argues
Cutting taxation on labour is less effective in boosting growth, researchers say
Recent fiscal reforms by the then French government would have had greater stimulative effects if they had focused more on reducing taxes on income from capital, a working paper published by the Banque de France argues.
In Should euro area countries cut taxes on labour or capital in order to boost their growth?, Barbara Castelletti Font, Pierrick Clerc and Matthieu Lemoine use a dynamic general stochastic equilibrium model, based on data from France.
The authors simulate the effects on output
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