Optimal taxation, critical-level utilitarianism and economic growth.

Abstract

In this work we analyze the issue of taxation in an intertemporal economywith endogenous fertility under critical-level utilitarianism, both from apositive and normative standpoint. On the positive side we analyse theeffects of a change in the tax on capital income and on the population size,both separately and in a policy aiming at maintaining per-capita debtconstant. On the normative side, we characterize the first-best and second-best optimal tax structures both when labour supply is exogenous andendogenous.