Optimal Capital Income Taxation and Redistribution

Ulrike Vogelgesang and Ulrike Ludden

No 1999-10, GK working paper series from Post Graduate Programme "Allocation on Financial Markets", University of Mannheim

Abstract: This paper studies the effects of agent heterogeneity on optimal capital income tax rates. In a two period model with arbitrarily many heterogeneous agents, we explicitly derive the welfare effects of taxation depending on the distribution of the agents' characteristics. In particular, we show that the sign of the optimal capital income tax rate depends not on the extent of inequality in goods endowments and productivities each by itself, but on a measure of inequality in their joint distribution.

Keywords: Optimal taxation; capital income; heterogeneous agents; redistribution (search for similar items in EconPapers)
JEL-codes: H21 H24 (search for similar items in EconPapers)
Pages: 29 pages
Date: 1999-04, Revised 2000-04
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Optimal Capital Income Taxation and Redistribution (2001)
Working Paper: Optimal Capital Income Taxation and Redistribution (2000)
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