This paper shows that capital-skill complementarity provides a quantitatively significant rationale to tax capital for … redistributive governments. The optimal capital income tax rate is 60%, which is significantly higher than the optimal rate of 48% in … an identically calibrated model without capital-skill complementarity. The skill premium falls from 1.9 to 1.67 along the …

The Ramsey optimal taxation theory implies that the tax rate on capital income should be zero in the long run. This … any other group in the economy. This paper demonstrates that although all households agree that capital income taxation … reform that is funded mostly by higher taxes on labor income while households with little wealth would prefer a reform that …