Optimal Income Taxation with Asset Accumulation

Sebastian Koehne, Nicola Pavoni and Arpad Abraham ()

No 1161, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: Several frictions might prevent (or make undesirable) the full taxation of savings. Due to international capital mobility, for instance, the government may not have perfect control over agent's saving and consumption decisions. We show in this paper that a restricted ability to tax savings has important implications for the taxation of labor income. Specifically, when agents have preferences with convex absolute risk-aversion, we find that optimal marginal tax rates on labor income become more regressive when savings cannot be fully taxed.

Date: 2011
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Related works:
Working Paper: Optimal Income Taxation with Asset Accumulation (2014)
Working Paper: Optimal Income Taxation with Asset Accumulation (2014)
Working Paper: Optimal Income Taxation with Asset Accumulation (2014)
Working Paper: Optimal income taxation with asset accumulation (2012)
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