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Labor-dependent capital income taxation that encourages work and saving
| Content Provider | EconStor |
|---|---|
| Author | Kitao, Sagiri |
| Abstract | This paper proposes a simple mechanism of capital taxation that is negatively correlated with labor supply. Using a life-cycle model of heterogeneous agents, I show that this tax scheme provides a strong work incentive when households possess large assets and high productivity later in the life cycle, when they would otherwise work less. This reformed system also adds to the saving motive and raises aggregate capital. Moreover, the increased economic activities expand the tax base, and the revenue-neutral reform results in a lower average tax rate. My findings show that this tax scheme improves long-run welfare and that the majority of current generations would experience a welfare gain from a transition to the reformed system. |
| File Format | |
| Language | English |
| Publisher | Federal Reserve Bank of New York |
| Publisher Date | 2010-01-01 |
| Publisher Place | New York, NY |
| Access Restriction | Open |
| Rights Holder | http://www.econstor.eu/dspace/Nutzungsbedingungen |
| Subject Keyword | Capital income taxation life cycle Fiscal Policy Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes Fiscal Policies and Behavior of Economic Agents: Household |
| Content Type | Text |
| Resource Type | Article |
