Rise in income tax can boost growth: Fed study
A Federal Reserve paper published on Thursday says that an increase in the capital-income tax may stimulate investment and improve overall welfare.
Vasia Panousi, the paper's author, measures the macroeconomic and welfare effects of capital-income taxation in an environment where investors face uninsurable idiosyncratic investment risk. Panousi says an increase in the tax acts as insurance, which reduces the incentive to save and increases the rate of interest. This in turn reduces the effective
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