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More on the Optimal Taxation of Capital

Author

Listed:
  • V. V. Chari

    (University of Minnesota)

  • Pedro Teles

    (Banco de Portugal, Universidade Catolica)

  • Juan Nicolini

    (Federal Reserve Bank of Minneapolis)

Abstract

Should capital income taxes be zero in the long run, as argued by Chamley (1986) and Judd (1985)? Or should instead capital be heavily taxed as suggested by Straub and Werning (2015)? We revisit the Ramsey literature on the optimal taxation of capital and make again the case for a low, possibly zero, tax on capital income.

Suggested Citation

  • V. V. Chari & Pedro Teles & Juan Nicolini, 2016. "More on the Optimal Taxation of Capital," 2016 Meeting Papers 1364, Society for Economic Dynamics.
  • Handle: RePEc:red:sed016:1364
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    File URL: https://economicdynamics.org/meetpapers/2016/paper_1364.pdf
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    References listed on IDEAS

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    1. ColemanII, Wilbur John, 2000. "Welfare and optimum dynamic taxation of consumption and income," Journal of Public Economics, Elsevier, vol. 76(1), pages 1-39, April.
    2. Chari, V V & Christiano, Lawrence J & Kehoe, Patrick J, 1994. "Optimal Fiscal Policy in a Business Cycle Model," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 617-652, August.
    3. Judd, Kenneth L., 1999. "Optimal taxation and spending in general competitive growth models," Journal of Public Economics, Elsevier, vol. 71(1), pages 1-26, January.
    4. Judd, Kenneth L., 1985. "Redistributive taxation in a simple perfect foresight model," Journal of Public Economics, Elsevier, vol. 28(1), pages 59-83, October.
    5. Andrew Atkeson & V. V. Chari & Patrick J. Kehoe, 1999. "Taxing capital income: a bad idea," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum, pages 3-17.
    6. Lucas, Robert Jr. & Stokey, Nancy L., 1983. "Optimal fiscal and monetary policy in an economy without capital," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 55-93.
    7. Atkinson, A. B. & Stiglitz, J. E., 1972. "The structure of indirect taxation and economic efficiency," Journal of Public Economics, Elsevier, vol. 1(1), pages 97-119, April.
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    Cited by:

    1. Leal-Ordoñez Julio C. & Mandujano Javier, 2019. "Fear of taxes," Working Papers 2019-09, Banco de México.
    2. Claudio Cesaroni, 2017. "Optimal Long-Run Inflation and the Informal Economy," Bank of Lithuania Working Paper Series 46, Bank of Lithuania.

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