Generational accounting : a comparison between various taxes' incidence on the young and old in South Africa
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Date
Authors
Van Heerden, J.H. (Jan Horn), 1957-
Schoeman, N.J. (Nicolaas Johannes)
Journal Title
Journal ISSN
Volume Title
Publisher
Bureau for Economic Research and the Graduate School of Business, University of Stellenbosch
Abstract
This article focuses on the applicability of intergenerational accounting to contribute towards more effective fiscal policy for the correction of wealth imbalances in South Africa. Three scenarios are tested using a general equilibrium model with overlapping generations. An increase in the tax on capital income has a positive effect on the distribution of personal wealth between rich and poor, but it decreases total production. An estate tax improves the current distribution of wealth with much more positive results. Both total consumption and the total capital stock increase. The welfare position of the rich is largely unaffected while that of the poor increases substantially. Lastly, it is shown that an increase in indirect taxes produces negative results. The welfare of the poorer group decreases and at the same time there is a decline in the general level of welfare due to lower levels of production and consumption in the economy.
Description
Keywords
Wealth redistribution, Tax reform, Estate tax, Capital income
Sustainable Development Goals
Citation
Van Heerden, JH & Schoeman, NJ 2000, 'Generational accounting: a comparison between various taxes' incidence on the young and old in South Africa', Journal for Studies in Economics and Econometrics, vol. 24, no. 2, pp. 35-51. [http://www.journals.co.za/ej/ejour_bersee.html]