The Ramsey optimal taxation theory implies that the tax rate on capital income should be zero in the long run. This … reforms are modest. -- optimal taxation ; inequality ; redistribution …

provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is … capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results … bound on optimal taxes: even for welfare functions that do not value redistribution, marginal tax rates are positive for all …