This paper concentrates on the primary theme of CONSIDER THE EXERCISE ABOVE AND SET THE CAPITAL INCOME TAX RATE IN COUNTRY 1 AT Τ = 0:20. A…. in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.
Consider the exercise above and set the capital income tax rate in country 1 at τ = 0:20.
a. Find the change in total capital income, total labor income, and the revenue raised in country 1 for N = 2 and N = 100.
b. What happens to the before-tax marginal product of capital in the countries without taxes for N = 2 and N = 100?
c. Are the workers in country 1 better o¤ as a result of the tax? What about the impact of the tax on the welfare of the workers in non taxing countries?
d. Discuss the tax-shifting between workers and capitalists as the number of countries increases from N = 2 to N = 100.