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Wealth Taxes and Inequality

Nicola Borri and Pietro Reichlin ()

No 13067, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze the optimal combination of wealth and labor tax rates in a model where wealth-to-income ratios and wealth inequality are rising endogenously due to unbalanced technological improvement in a two-sector economy. We consider rich and poor households, financial and housing wealth, and find that a "realistic" optimal steady state tax structure includes some taxation of labor, zero taxation of financial wealth, a housing wealth tax on rich households and a housing wealth subsidy on poor households. These findings are robust with respect to variations in the housing demand elasticity.

Keywords: Housing; inequality; Wealth; Wealth Taxes (search for similar items in EconPapers)
JEL-codes: E21 E62 G1 H2 H21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-pbe and nep-pub
Date: 2018-07
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