Is capital back? The role of land ownership and savings behavior
Max Franks (),
Kai Lessmann and
Ottmar Edenhofer ()
Additional contact information
Max Franks: Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association
Anselm Schultes: Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association
Kai Lessmann: Potsdam Institute for Climate Impact Research (PIK), Member of the Leibniz Association
International Tax and Public Finance, 2018, vol. 25, issue 5, 1252-1276
Abstract Wealth inequality is a major political concern in most OECD countries. Under this premise, we analyze different policy instruments in terms of their impact on wealth inequality and output. In a general equilibrium model, we disaggregate wealth in its capital and land components, and savings in their life-cycle and bequest components. Households are heterogeneous in their taste for leaving bequests. We show that governments have considerable freedom in reducing wealth inequality without sacrificing output: Land rent taxes enhance output due to a portfolio effect and reduce wealth inequality slightly. Bequest taxes have the highest potential to reduce inequality, and their effect on output is moderate. By contrast, we confirm the standard result that capital taxes reduce output strongly and show that they only have moderate redistributive effects. Furthermore, we find that using the tax proceeds for transfers to the young generations enhances output the most and further reduces wealth inequality.
Keywords: Fiscal policy; Wealth distribution; Inequality; Capital tax; Bequests; Land rent tax (search for similar items in EconPapers)
JEL-codes: D31 E62 H23 H24 Q24 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10797-018-9486-3 Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:itaxpf:v:25:y:2018:i:5:d:10.1007_s10797-018-9486-3
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10797/PS2
Access Statistics for this article
International Tax and Public Finance is currently edited by Ronald B. Davies and Kimberly Scharf
More articles in International Tax and Public Finance from Springer, International Institute of Public Finance Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().