A Quantitative Analysis of Capital Income Taxation
Abstract
This paper studies the quantitative impact of eliminating capital income taxation on capital accumulation and steady-state welfare in a general equilibrium model with overlapping generations of sixty-five-period-lived individuals who face idiosyncratic earnings risk, borrowing constraints, and life-span uncertainty. Under a wide range of parameter configurations, the capital income tax rate that maximizes steady-state welfare is positive, even though eliminating it completely would raise the steady-state capital stock toward the Golden Rule. This is because the tax burden is shifted toward the younger and liquidity constrained years, reducing the individuals' ability to self-insure. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.Download Info
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Bibliographic Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 39 (1998)
Issue (Month): 2 (May)
Pages: 307-28
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Related research
Keywords:Other versions of this item:
- Imrohoroglu, S., 1997. "A Quantitative Analysis of Capital Income Taxation," Papers 1997/12, Koc University.
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Cagri S. Kumru & Athanasios C. Thanopoulos, 2011.
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- Cagri Seda Kumru & Athanasios C. Thanopoulos, 2011. "Self-control Preferences and Taxation: A Quantitative Analysis in a Life-cycle Model," Working Papers 201122, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
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"Optimal Taxation in Life-Cycle Economies,"
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"Optimal Capital Income Taxation with Means-tested Benefits,"
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- Cagri Seda Kumru & John Piggott, 2012. "Optimal Capital Income Taxation with Means-tested Benefits," DEGIT Conference Papers c017_019, DEGIT, Dynamics, Economic Growth, and International Trade.
- Cagri Seda Kumru & John Piggott, 2012. "Optimal Capital Income Taxation with Means-tested Benefits," Working Papers 201215, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
- Juergen Jung, 2008. "The Timing of Redistribution," Caepr Working Papers 2008-015, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
- Marco Cozzi, 2012. "Risk Aversion Heterogeneity, Risky Jobs and Wealth Inequality," Working Papers 1286, Queen's University, Department of Economics.
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"Welfare Improving Taxation on Savings in a Growth Model,"
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218, Tor Vergata University, CEIS, revised 27 Jan 2012.
- Xin Long & Alessandra Pelloni, 2012. "Welfare Improving Taxation on Savings in a Growth Model," Working Paper Series 01_12, The Rimini Centre for Economic Analysis.
- Long Xin & Pelloni Alessandra, 2011. "Welfare improving taxation on saving in a growth model," wp.comunite 0071, Department of Communication, University of Teramo.
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- Marco Cozzi, 2011. "Equilibrium Heterogeneous-Agent Models as Measurement Tools: some Monte Carlo Evidence," 2011 Meeting Papers 1380, Society for Economic Dynamics.
- Kartik B. Athreya & Andrea L. Waddle, 2007. "Implications of some alternatives to capital income taxation," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 31-55.
- Césaire A. Meh & Yaz Terajima, 2009.
"Uninsurable Investment Risks and Capital Income Taxation,"
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- Césaire Meh & Yaz Terajima, 2009. "Uninsurable investment risks and capital income taxation," Annals of Finance, Springer, vol. 5(3), pages 521-541, June.
- Baltasar Manzano & Jesús Ruiz, 2002.
"Política Fiscal Óptima: el estado de la Cuestión,"
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- Baltasar Manzano & Jesús Ruiz, 2004. "Política fiscal óptima: el estado de la cuestión," Investigaciones Economicas, Fundación SEPI, vol. 28(1), pages 5-41, January.
- Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 2000.
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- Ayse Imrohoroglu & Selahattin Imrohoroglu & Douglas H. Joines, 2003. "Time-Inconsistent Preferences And Social Security," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 745-784, May.
- Juergen Jung & Chung Tran, 2008.
"The Macroeconomics of Health Savings Accounts,"
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- Juergen Jung & Chung Tran, 2010. "The Macroeconomics of Health Savings Accounts," Working Papers 2010-12, Towson University, Department of Economics, revised May 2011.
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