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Human Capital and the Income Tax

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  • Louis Kaplow

Abstract

This article examines how to treat human capital -- perhaps the vast majority of the capital stock -- under an ideal, Haig-Simons income tax. Innate ability, investments in human capital, and uncertainty in future earnings are considered. It is demonstrated that conventional income tax treatment and proposed modifications are closer to implementing a consumption tax than an income tax. Approximating ideal income tax treatment may be feasible, but assessing its desirability would require further inquiry.

Suggested Citation

  • Louis Kaplow, 1993. "Human Capital and the Income Tax," NBER Working Papers 4299, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4299
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    References listed on IDEAS

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    1. Auerbach, Alan J, 1991. "Retrospective Capital Gains Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 167-178, March.
    2. James Davies & John Whalley, 1991. "Taxes and Capital Formation: How Important is Human Capital?," NBER Chapters, in: National Saving and Economic Performance, pages 163-200, National Bureau of Economic Research, Inc.
    3. B. Douglas Bernheim & John B. Shoven, 1991. "National Saving and Economic Performance," NBER Books, National Bureau of Economic Research, Inc, number bern91-2, July.
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    Cited by:

    1. Peter Birch Soerensen, "undated". "From the Global Income Tax To the Dual Income Tax: Recent Tax Reforms in The Nordic Countries," EPRU Working Paper Series 93-07, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    2. Poterba, James M., 2002. "Taxation, risk-taking, and household portfolio behavior," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 17, pages 1109-1171, Elsevier.
    3. Peter Sørensen, 1994. "From the global income tax to the dual income tax: Recent tax reforms in the Nordic countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 1(1), pages 57-79, February.

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