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Optimal Taxation, Economic Growth and Income Inequality

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Abstract

That there is a trade-off between equityand efficiency (economic growth) is wellknown. Two models have been developed thatlink government spending and taxation toeconomic growth. This paper uses thesemodels to provide estimates of thegrowth-maximizing tax rate. Then, a twoequation structural model is developed andestimated that is used to find thetrade-off rate between economic growth andincome inequality and the growth-maximizinglevel of income inequality for the UnitedStates over the period 1960–1990.

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  1. University of Texas at Dallas, 27872 Camino Del Rio, San Juan Capistrano, CA o, 92675

    Gerald W. Scully

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  1. Gerald W. Scully
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Scully, G.W. Optimal Taxation, Economic Growth and Income Inequality. Public Choice 115, 299–312 (2003). https://doi.org/10.1023/A:1024223916710

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