We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results … income levels. Optimal capital taxes are significant and yield sizable welfare gains; in particular if labor income taxes are …

We characterize the optimal linear tax on capital in an Overlapping Generations model with two period lived households … optimal aggregate saving rate is independent of income risk. The optimal time-invariant tax on capital is increasing in income …

households would pay more attention to capital income risk if they have (i) lower initial wealth endowment, (ii) lower marginal … uninsured capital income risk, and suffer from an information-processing capacity constraint. For given attention devoted to … capital income risk, we solve for the optimal consumption-saving choices and show that the expected welfare is increasing with …