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Consider a simple two-period model and labor supply is exogenously determined. A representative consumer only earns labor income in the period 0, and no any
Consider a simple two-period model and labor supply is exogenously
determined. A representative consumer only earns labor income in the period 0, and no
any income in the period 1. The vertical axis is future consumption C1 and the
horizontal axis is current consumption C0 . Compare labor income tax and interest
income tax with the equal revenue requirement, which tax would result in the change
in C0 , utility level after tax, and more excess burden?
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