This paper provides an efficiency argument in favour of progressive labour income taxation. When the consumer faces a trade-off between investments in financial and human capital, a proportional comprehensive income tax tends to discriminate in favour of human capital investments. This effect is...

Under standard assumptions, optimum commodity taxation (OCT) should target non-renewable resources (NRRs) in priority. NRRs should be taxed at a higher rate than otherwise-identical conventional commodities. NRR substitutes and complements should receive a particular tax treatment. When reserves...

Previous literature demonstrates that in a computational life cycle model the optimal tax on capital is positive and large. Given the computational complexities of these overlapping generations models it is helpful to determine the relative importance of the economic factors driving this result....

This paper studies the aggregate and distributional implications of Markov-perfect tax-spending policy in a neoclassical growth model with capitalists and workers. Focusing on the long run, our main findings are: (i) it is optimal for a benevolent government, which cares equally about its...

Many authors have argued that capital income risk is a major determinant of wealth inequality. Inspired by this, I develop a model of optimal taxation of capital income in which wealth and income inequality is a result of capital income shocks together with frictions in financial markets. I use...

This note demonstrates that optimal tax calculations in overlapping generations models should not be based exclusively on long-run welfare changes. As the latter represent a mix of efficiency and intergenerational redistribution effects, they typically favor policies which redistribute towards...

Samuelson (1964) showed that an income tax with an allowance for "economic" depreciation leads to asset valuations that are independent of their holders' marginal rates of tax. The tax system is then "neutral," in the sense that assets have the same value to all, irrespective of whether or at...