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Environmental Taxes, International Capital Mobility and Inefficient Tax Systems: Tax Burden vs. Tax Shifting

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  • Ruud de Mooij
  • A. Bovenberg

Abstract

This paper deals with the so-called ‘double dividend’ of an environmental tax reform. In a model with only labor and a polluting input as factors of production, we find that society faces a trade-off between internalizing environmental externalities and raising revenues in the least distortionary way. However, if capital enters the production structure, an ecological tax reform may render the tax structure more efficient from a non-environmental point of view, thereby raising not only environmental quality but also private incomes. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • Ruud de Mooij & A. Bovenberg, 1998. "Environmental Taxes, International Capital Mobility and Inefficient Tax Systems: Tax Burden vs. Tax Shifting," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 7-39, February.
    • Handle: RePEc:kap:itaxpf:v:5:y:1998:i:1:p:7-39
    DOI: 10.1023/A:1008606824395
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