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Long-run inheritance tax and capital income tax with rational altruism

Author

Listed:
  • Pascal Belan
  • Erwan Moussault

    (Université de Cergy-Pontoise, THEMA)

Abstract

We consider a two-period overlapping generation model with rational altruism à la Barro. The government finances public spending with taxes on labor income, capital income and inheritance. We show that, in the long-run, inheritance tax and capital income tax are generally different from zero, even if the optimal tax policy leads to the modified Golden-rule.

Suggested Citation

  • Pascal Belan & Erwan Moussault, 2020. "Long-run inheritance tax and capital income tax with rational altruism," Thema Working Papers 2020-02, THEMA (Théorie Economique, Modélisation et Applications), CY Cergy-Paris University, ESSEC and CNRS.
    • Handle: RePEc:ema:worpap:2020-02
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    References listed on IDEAS

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    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
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    Keywords

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    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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