Increased Regressivity of the Optimal Capital Tax under a Welfare Constraint for Newborn Children
In this paper, we develop a three-period model that incorporates parents' heterogeneous skills and a welfare constraint for newborn children. Our numerical analysis shows how the optimal tax system is affected by the weight attached to the newborn child by a social planner. The main finding is that an increase in the guaranteed welfare level for newborn children makes the optimal capital income tax rate more regressive. This result is closely related to the trade-off between incentives for parents and insurance for the newborn child.
|Date of creation:||Jan 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Yoshida-Honmachi, Sakyo-ku, Kyoto 606-8501|
Web page: http://www.kier.kyoto-u.ac.jp/eng/index.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stefania Albanesi & Christopher Sleet, 2004.
"Dynamic optimal taxation with private information,"
Discussion Paper / Institute for Empirical Macroeconomics
140, Federal Reserve Bank of Minneapolis.
- Werning, Ivan & Farhi, Emmanuel, 2007.
"Inequality and Social Discounting,"
3451391, Harvard University Department of Economics.
- Judd, Kenneth L., 1985.
"Redistributive taxation in a simple perfect foresight model,"
Journal of Public Economics,
Elsevier, vol. 28(1), pages 59-83, October.
- Kenneth L. Judd, 1982. "Redistributive Taxation in a Simple Perfect Foresight Model," Discussion Papers 572, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Narayana Kocherlakota, 2004.
"Zero Expected Wealth Taxes: A Mirrlees Approach to Dynamic Optimal Taxation,"
122247000000000729, UCLA Department of Economics.
- Narayana R. Kocherlakota, 2005. "Zero Expected Wealth Taxes: A Mirrlees Approach to Dynamic Optimal Taxation," Econometrica, Econometric Society, vol. 73(5), pages 1587-1621, 09.
- Narayana R. Kocherlakota, 2003. "Zero Expected Wealth Taxes: A Mirrlees Approach to Dynamic Optimal Taxation," Levine's Bibliography 666156000000000426, UCLA Department of Economics.
- Emmanuel Farhi & Iván Werning, 2010.
"Progressive Estate Taxation,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 125(2), pages 635-673.
- Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75.
When requesting a correction, please mention this item's handle: RePEc:kyo:wpaper:846. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ryo Okui)
If references are entirely missing, you can add them using this form.