Vasilev, Aleksandar (2020) Taxation and welfare: measuring the effect of Bulgaria’s 2007-08 corporate-personal income tax reforms. Theoretical and Practical Research in Economic Fields, 10 (2). pp. 113-117. ISSN 2068-7710
Full content URL: https://doi.org/10.14505//tpref.v10.2(20).04
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taxation_growth_BG_accepted.pdf - Whole Document 319kB |
Item Type: | Article |
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Item Status: | Live Archive |
Abstract
This paper utilizes a simple general-equilibrium model to analyse the long-run effects of Bulgaria’s 2007-08 corporate-personal income tax reforms. In particular, we consider the effect working through the firm’s capital structure, and argue that the new reforms incentivize firms to increase investment, as the new regime benefits retained earnings. The increase in capital increases output and productivity, which in turn increases consumption and welfare. On average, households are enjoying 8.65% higher consumption in the new steady-state in the benchmark scenario. As a robustness check, we allow for a variable labor supply, where the gain increases further by additional 3.9% of consumption, to produce an overall gain of 13.55%.
Keywords: | tax reform, taxation, welfare, Bulgaria |
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Subjects: | L Social studies > L120 Microeconomics L Social studies > L130 Macroeconomics |
Divisions: | Lincoln International Business School |
ID Code: | 43802 |
Deposited On: | 17 Feb 2021 15:36 |
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