Question: Consider a simple two-period model and labor supply is exogenously determined. A representative consumer only earns labor income in the period 0, and no any

Consider a simple two-period model and labor supply is exogenously

determined. A representative consumer only earns labor income in the period 0, and no

any income in the period 1. The vertical axis is future consumption C1 and the

horizontal axis is current consumption C0 . Compare labor income tax and interest

income tax with the equal revenue requirement, which tax would result in the change

in C0 , utility level after tax, and more excess burden?

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