Abstract：
This paper examines the welfare-maximizing corporate income tax and consumption tax rates in an R&D-based growth model with endogenous labor supply. Furthermore, it examines how the welfare-maximizing tax rates change as patent protection becomes stronger as seen in many countries. The results show that as patent protection becomes stronger, the corporate income tax rate should be higher and the consumption tax rate should be lower. This implies that reductions in the corporate income tax rate accompanied by increases in the consumption tax rate create welfare losses.

Keywords: patent protection, corporate income tax, consumption tax, R&D-based growth model
JEL classification: O34, O38, O40