We show in a two-period world with endogenous savings and two assets, one of them exhibiting a stochastic return that … excess return with a special tax rate. There is no trade off between risk allocation and efficiency in intertemporal … triple income tax. This distinction and a special tax rate on the excess return is necessary in order to have an optimal risk …

ex ante identical households and the no-risk case with heterogeneous abilities come out as special cases. -- optimal … income ; taxation ; wage risk …

We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear … capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results …