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 … exhibits an optimal aggregate saving rate that is independent of income risk, whereas the optimal time-invariant tax on capital …

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 …