In a new model with incomplete markets, I quantitatively determine tax reforms that are welfare improving, distributionally neutral, and leave the budget balance unchanged in the long run. I consider a new reform. I eliminate capital income taxation and replace it with progressive consumption...

I study the transitional welfare effects of a budget neutral reform in a small open economy with overlapping generations and age-dependent mortality. The reform eliminates the capital income tax and replaces it with a consumption tax. I simulate the model for Chile and calculate lifetime welfare...