TY  - JOUR
AU  - Negro,Marco Del
AU  - Perri,Fabrizio
AU  - Schivardi,Fabiano
TI  - Tax buyouts
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15847
PY  - 2010
Y2  - March 2010
UR  - http://www.nber.org/papers/w15847
L1  - http://www.nber.org/papers/w15847.pdf
N1  - Author contact info:
Marco Del Negro
Federal Reserve Bank of New York
33 Liberty Street
NY NY 10045
E-Mail: marco.delnegro@ny.frb.org

Fabrizio Perri
University of Minnesota
Department of Economics
4-177 Hanson Hall
Minneapolis, MN 55455
Tel: 612/625-7504
Fax: 612/624-0209
E-Mail: fperri@umn.edu

Fabiano Schivardi
University of Cagliari
Viale S. Ignazio, 78
09123 Cagliari
Italy
E-Mail: schiva@stanfordalumni.org
AB  - The paper studies a fiscal policy instrument that can reduce fiscal distortions without affecting revenues, in a politically viable way. The instrument is a private contract (tax buyout), offered by the government to each citizen, whereby the citizen can choose to pay a fixed price in exchange for a given reduction in her tax rate for a period of time. We introduce the tax buyout in a dynamic overlapping generations economy, calibrated to match several features of the US income, taxes and wealth distributions. Under simple pricing, the introduction of the buyout is revenue neutral but, by reducing distortions, it benefits a significant fraction of the population and leads to sizable increases in aggregate labor supply, income and consumption.
ER  -