Redistribution with unobservable bequests: a case for taxing capital income

Robin Boadway, Maurice Marchand (mmarchand@core.ucl.ac.be) and Pierre Pestieau
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Maurice Marchand: Center for Operations Research and Econometrics (CORE) and Institut d'Administration et de Gestion (IAG), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium

No 1997070, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper addresses the question of the optimal taxation of labour and interest income in an overlapping generations model with two unobservable characteristics, ability and inheritance. We assume realistically that saving can only be taxed anonymously, whereas the tax on labour earnings can be individualized and made non-linear. In such a setting, we show that a with- holding tax on interest income along with a non-linear tax on labour income is desirable. The role of interest income taxation is to indirectly tax inherited wealth.

Keywords: Capital income taxation; tax evasion; bequest (search for similar items in EconPapers)
JEL-codes: H21 H24 H26 (search for similar items in EconPapers)
Date: 1997-09-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Redistribution with Unobservable Bequests: A Case for Taxing Capital Income (2000)
Working Paper: Redistribution with unobservable bequests: a case for taxing capital income (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1997070

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