Professor Raffaele Rossi, University of Birmingham

"Taxing Consumption in Unequal Economies"
Thursday, 25 April 2024. 15:00-16:30
Room 383, Adam Smith Business School & PGT Hub

Abstract

This paper shows that linear consumption taxes are a powerful tool to implement efficient redistribution. We derive this result in a quantitative life-cycle economy that reproduces the distribution of income and wealth in the United States. Optimal policy calls for raising all fiscal revenues from consumption, and providing redistribution via a highly progressive wage tax schedule. Capital income and wealth should not be taxed. This policy reduces inequality and increases productivity, and brings large welfare gains relative to the status-quo. Around two-thirds of these gains are due to redistribution. Finally, our reform is also welfare improving in the short-run.

Bio

I joined the Department of Economics at Birmingham Business School in July 2023. Before going to Birmingham, I was Reader at the University of Manchester. My research interests lie in macroeconomics, public finance, and applied time series econometrics.

For further information, please contact business-school-research@glasgow.ac.uk

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First published: 10 April 2024

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