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Wealth Taxation and Life Expectancy


  • Antonio Bellofatto

    (University of Queensland)


I study the optimal taxation of wealth in a dynastic economy with heterogeneous mortality risk, and various sources of wealth accumulation (including savings and bequests). Working individuals are indexed by skills which are private information. Skills not only determine earning abilities but also correlate with survival probability, so that more productive agents on average live longer. My analysis points to the longevity gradient as a crucial determinant for optimal wealth taxation, both from a theoretical and from a quantitative angle. In particular, due to longevity variations, savings should be marginally taxed in expectation, while bequests received early in life should be marginally subsidized on average. When calibrated to U.S. data, such forces are commensurate with the actual levels of wealth taxation in a sample of developed countries.

Suggested Citation

  • Antonio Bellofatto, 2019. "Wealth Taxation and Life Expectancy," 2019 Meeting Papers 1278, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:1278

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    Cited by:

    1. Roozbeh Hosseini & Ali Shourideh, 2019. "Retirement Financing: An Optimal Reform Approach," Econometrica, Econometric Society, vol. 87(4), pages 1205-1265, July.

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