Document Type

Article

Abstract

Growth in the human capital sector's productivity explains in part how US postwar growth and welfare could have increased while US tax rates declined. Modeling tax evasion within an endogenous growth model with human capital, an upward trend in goods and human capital sectors gradually decreases tax evasion and allows for tax rate reduction. Using estimated goods and human capital sectoral productivities, the model explains 30 percent of the actual decline in a weighted average of postwar US top marginal personal and corporate tax rates. The productivity increases are asymmetric in a fashion related to that of McGrattan and Prescott. © 2014 by The University of Chicago. All rights reserved.

Publication Date

1-1-2014

ISSN

19328575

Publication Title

Journal of Human Capital

Volume

8

Issue

1

First Page

42

Last Page

79

DOI

10.1086/675328

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