Working Paper
The Johansson-Samuelson Theorem in General Equilibrium: A Rebuttal
Francesco Menoncin, Paolo Panteghini
CESifo, Munich, 2008
CESifo Working Paper No. 2352
CESifo, Munich, 2008
CESifo Working Paper No. 2352
The well-known Johansson-Samuelson Theorem proves that, in partial equilibrium, comprehensive income taxation with a uniform tax rate is neutral in terms of investment decisions, if fiscal depreciation allowances coincide with economic depreciation. In this article we show that this result does not hold in general equilibrium, unless fairly restrictive conditions are met.
CESifo Category
Public Finance
Public Finance
Keywords: general equilibrium, investment neutrality, uniform taxation
JEL Classification: H250,H320