TAX SHIFTING THROUGH MOBILITY IN THE THEORY OF TAX INCIDENCE

This paper characterizes the role of capital and labor mobility in the shifting of capital taxes in a Harberger-type 2x2 general-equilibrium model with partially-mobile factors. We first provide and examine an intuitive decomposition of the incidence of a selective capital tax in to a ''specificity effect'' and a ''mobility effect''. Then we derive results on tax incidence in a partially-mobile-factors context. The re levance of factor mobility differentials is examined.