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Optimal indirect and capital taxation

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  • Mikhail Golosov
  • Narayana R. Kocherlakota
  • Aleh Tsyvinski

Abstract

In this paper, we consider an environment in which agents’ productivities are private information, potentially multi-dimensional, and follow arbitrary stochastic processes. We allow for arbitrary incentive-compatible and physically feasible tax schemes. We prove that it is typically Pareto optimal to have positive capital taxes. As well, we prove that in any given period, it is Pareto optimal to tax consumption goods at a uniform rate.

Suggested Citation

  • Mikhail Golosov & Narayana R. Kocherlakota & Aleh Tsyvinski, 2001. "Optimal indirect and capital taxation," Working Papers 615, Federal Reserve Bank of Minneapolis.
  • Handle: RePEc:fip:fedmwp:615
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    Keywords

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