The Atkinson-Stiglitz Theorem and its extensions have been interpreted as implying that capital income should not be taxed. If, as seems reasonable on empirical grounds, we introduce production of household goods with close market substitutes, this conclusion no longer holds. We analyse optimal...

The paper analyzes the optimal mix of capital and wage taxation when policymakers maximize the political support of workers and capitalists, subject to a fixed revenue requirement. Capital market integration increases the efficiency costs of a tax on capital but simultaneously changes the...

This study empirically investigates the direct incidence of the corporate income tax through wage bargaining, using an industry-region level panel data set on all corporations in Germany over the period 1998 to 2006. Our measure of direct incidence for the first time accounts for employment...

This study assesses the burden of capital income tax passed onto labor through wage bargaining over economic rents, using estimations based on a unique pseudo-panel data set from Germany for the period 1998 to 2006. Tax return data cover the universe of corporations subject to corporate income...

The importance of capital loss offset provisions in a world of risk is well documented in the tax literature. However, the potential deadweight losses (DWLs) owing to imperfect offset has not been fully explored. This paper develops a framework whereby that investigation can be carried out, and...

This paper revamps Harberger's primitive tax theory and obtains completely different results. When his perfectly inelastic supply is corrected, his total net capital income is reduced. The existence of another industry forces the firm of the taxed industry, not the capital owners, to bear the...

This paper extends application of the distributional national account (DINA) method beyond historical analysis to a forward-looking policy assessment of eight topical U.S. capital income tax proposals including corporate income tax repeal, corporate integration, and a reduced form of the pending...

The Atkinson-Stiglitz Theorem and its extensions have been interpreted as implying that capital income should not be taxed. If, as seems reasonable on empirical grounds, we introduce production of household goods with close market substitutes, this conclusion no longer holds. We analyse optimal...

We study the incidence of capital income taxation in a dynamic general equilibrium model with heterogeneous firms and lifecycle households. In this incomplete market setting, marginal excess burdens of three capital taxes, namely corporate income, dividend and capital gains taxes, are vastly...