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How Should Capital Be Taxed?

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  • Spencer Bastani
  • Daniel Waldenström

Abstract

This survey discusses how capital should be taxed in advanced economies. We review the theoretical optimal tax literature, survey empirical studies on the distribution of capital and the distortionary costs of capital taxation, and analyze the desirability of specific taxes on capital income, wealth, property, inheritances, and corporate profits. Our overall conclusion is that capital taxation plays an important role in an optimal tax system, but only certain ways of taxing capital are able to strike a balance between optimality and administrative feasibility.

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  • Spencer Bastani & Daniel Waldenström, 2020. "How Should Capital Be Taxed?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 812-846, September.
  • Handle: RePEc:bla:jecsur:v:34:y:2020:i:4:p:812-846
    DOI: 10.1111/joes.12380
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    1. Vasilev, Aleksandar, 2020. "A progressive capital income tax - a bad idea, or just a useless idea? Lessons for Bulgaria (1999-2018)," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 402-411.

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