- 1 â T0 k (0) E (rpe i z) , respectively. For T0 k (0) = 0, all expressions coincide with those in Appendix F.2. G A Life-Cycle Economy In this section, I develop a standard two-period life-cycle framework, as introduced by Farhi and Werning (2010), for studying nonlinear capital taxation when there is scale dependence. Using this framework, I study the nonlinear tax incidence and optimal taxation in partial and in general equilibrium. Moreover, I deal with the presence of other policies. Firstly, I consider a subsidy on the costs of information acquisition (financial advisory). Secondly, I study a financial education program.
Paper not yet in RePEc: Add citation now
- Agersnap, O., and Zidar, O. M. (2020). âThe tax elasticity of capital gains and revenue-maximizing rates.â National Bureau of Economic Research.
Paper not yet in RePEc: Add citation now
- Aiyagari, S. R. (1994). âUninsured idiosyncratic risk and aggregate saving.â The Quarterly Journal of Economics, 109(3), 659â684.
Paper not yet in RePEc: Add citation now
- Ales, L., Kurnaz, M., and Sleet, C. (2015). âTechnical change, wage inequality, and taxes.â American Economic Review, 105(10), 3061â3101.
Paper not yet in RePEc: Add citation now
- Arrow, K. J. (1987). âThe demand for information and the distribution of income.â Probability in the Engineering and Informational Sciences, 1(1), 3â13.
Paper not yet in RePEc: Add citation now
- As standard in generational models (e.g., Piketty and Saez (2013)), I subdivide the investment period into h = 1, ..., H + 1 subperiods. For instance, for H = 30, the working life has a duration of 30 years. In the following environment, this means that, during their working life, households repeatedly interact on the financial market. In particular, they can adjust their portfolio and their financial knowledge. Between subperiods, there is no time discounting.
Paper not yet in RePEc: Add citation now
Atkinson, A. B., and Stiglitz, J. E. (1976). âThe design of tax structure: direct versus indirect taxation.â Journal of Public Economics, 6(1-2), 55â75.
Bach, L., Calvet, L. E., and Sodini, P. (2020). âRich pickings? risk, return, and skill in household wealth.â American Economic Review, 110(9), 2703â2747.
- Bakija, J. M., and Gentry, W. M. (2014). âCapital gains taxes and realizations: Evidence from a long panel of state-level data.â Working Paper.
Paper not yet in RePEc: Add citation now
Benhabib, J., Bisin, A., and Zhu, S. (2011). âThe distribution of wealth and fiscal policy in economies with finitely lived agents.â Econometrica, 79(1), 123â157.
Brülhart, M., Gruber, J., Krapf, M., and Schmidheiny, K. (2016). âTaxing wealth: Evidence from switzerland.â National Bureau of Economic Research.
Chamley, C. (1986). âOptimal taxation of capital income in general equilibrium with infinite lives.â Econometrica, 607â622.
Chetty, R. (2009). âSufficient statistics for welfare analysis: A bridge between structural and reduced-form methods.â Annu. Rev. Econ., 1(1), 451â488.
Diamond, P. A. (1975). âA many-person ramsey tax rule.â Journal of Public Economics, 4(4), 335â342.
Diamond, P. A. (1998). âOptimal income taxation: an example with a u-shaped pattern of optimal marginal tax rates.â American Economic Review, 83â95.
Dowd, T., McClelland, R., and Muthitacharoen, A. (2015). âNew evidence on the tax elasticity of capital gains.â National Tax Journal, 68(3), 511.
- Fagereng, A., Guiso, L., Malacrino, D., and Pistaferri, L. (2020). âHeterogeneity and persistence in returns to wealth.â Econometrica, 88(1), 115â170.
Paper not yet in RePEc: Add citation now
- Farhi, E., and Werning, I. (2010). âProgressive estate taxation.â The Quarterly Journal of Economics, 125(2), 635â673.
Paper not yet in RePEc: Add citation now
Feldstein, M., Slemrod, J., and Yitzhaki, S. (1980). âThe effects of taxation on the selling of corporate stock and the realization of capital gains.â The Quarterly Journal of Economics, 94(4), 777â791.
- Figure 8: Left Panel: Response of Realized Capital Gains to Reform 2; Right Panel: Response of Capital Gains Tax Revenues to Reform 2 0 200 400 600 800 1000 -5.5 -5 -4.5 -4 -3.5 -3 -2.5 -2 0 200 400 600 800 1000 18 20 22 24 26 28 30 Figure 9: Left Panel: Response of Realized Capital Gains to Reform 3; Right Panel: Response of Capital Gains Tax Revenues to Reform 3 C A Dynamic Economy In this section, I incorporate scale dependence into the dynamic bequest taxation model of Piketty and Saez (2013) that can be interpreted as a theory of capital taxation. I show that the main results from the previous section carry over. I discuss the main differences arising from a fully dynamic setting relative to the conceptual framework of Section 2. Moreover, I derive the optimal tax in general equilibrium. Finally, I deal with the role of uncertainty, which is present in the financial market of Section E.
Paper not yet in RePEc: Add citation now
Findeisen, S., and Sachs, D. (2016). âEducation and optimal dynamic taxation: The role of incomecontingent student loans.â Journal of Public Economics, 138, 1â21.
- Gabaix, X., Lasry, J.-M., Lions, P.-L., and Moll, B. (2016). âThe dynamics of inequality.â Econometrica, 84(6), 2071â2111.
Paper not yet in RePEc: Add citation now
Gerritsen, A., Jacobs, B., Rusu, A. V., and Spiritus, K. (2019). âOptimal taxation of capital income with heterogeneous rates of return.â Working Paper.
Golosov, M., Tsyvinski, A., and Werquin, N. (2014). âA variational approach to the analysis of tax systems.â Tech. rep., National Bureau of Economic Research.
- Golosov, M., Tsyvinski, A., Werning, I., Diamond, P., and Judd, K. L. (2006). âNew dynamic public finance: A userâs guide [with comments and discussion].â NBER macroeconomics annual, 21, 317â387.
Paper not yet in RePEc: Add citation now
- Greenwood, J., Hercowitz, Z., and Huffman, G. W. (1988). âInvestment, capacity utilization, and the real business cycle.â American Economic Review, 402â417.
Paper not yet in RePEc: Add citation now
Grossman, S. J., and Stiglitz, J. E. (1980). âOn the impossibility of informationally efficient markets. â American Economic Review, 70(3), 393â408.
Guvenen, F., Kambourov, G., Kuruscu, B., Ocampo-Diaz, S., and Chen, D. (2019). âUse it or lose it: Efficiency gains from wealth taxation.â National Bureau of Economic Research.
- Hendren, N. (2016). âThe policy elasticity.â Tax Policy and the Economy, 30(1), 51â89.
Paper not yet in RePEc: Add citation now
- Internal Revenue Service (2020). âSoi tax stats - private foundations harmonized microdata files (ascii).â https://www.irs.gov/statistics/ soi-tax-stats-private-foundations-harmonized-microdata-files-ascii, accessed: 2020-10-17.
Paper not yet in RePEc: Add citation now
Jakobsen, K., Jakobsen, K., Kleven, H., and Zucman, G. (2020). âWealth taxation and wealth accumulation: Theory and evidence from denmark.â The Quarterly Journal of Economics, 135(1), 329â388.
- Jordà , Ã., Knoll, K., Kuvshinov, D., Schularick, M., and Taylor, A. M. (2019). âThe rate of return on everything, 1870â2015.â The Quarterly Journal of Economics, 134(3), 1225â1298.
Paper not yet in RePEc: Add citation now
- Judd, K. L. (1985). âRedistributive taxation in a simple perfect foresight model.â Journal of Public Economics, 28(1), 59â83.
Paper not yet in RePEc: Add citation now
Kacperczyk, M., Nosal, J., and Stevens, L. (2019). âInvestor sophistication and capital income inequality.â Journal of Monetary Economics, 107, 18â31.
- Kline, R. B. (2015). Principles and practice of structural equation modeling. Guilford publications.
Paper not yet in RePEc: Add citation now
Krueger, D., and Ludwig, A. (2013). âOptimal progressive labor income taxation and education subsidies when education decisions and intergenerational transfers are endogenous.â American Economic Review, 103(3), 496â501.
- Kuhn, M., Schularick, M., and Steins, U. I. (2020). âIncome and wealth inequality in america, 1949â2016.â Journal of Political Economy, 128(9), 3469â3519.
Paper not yet in RePEc: Add citation now
- Lusardi, A., Michaud, P.-C., and Mitchell, O. S. (2017). âOptimal financial knowledge and wealth inequality.â Journal of Political Economy, 125(2), 431â477.
Paper not yet in RePEc: Add citation now
- Markowitz, H. (1952). âThe utility of wealth.â Journal of Political Economy, 60(2), 151â158.
Paper not yet in RePEc: Add citation now
Mirrlees, J. A. (1971). âAn exploration in the theory of optimum income taxation.â The Review of Economic Studies, 38(2), 175â208.
- Peress, J. (2004). âWealth, information acquisition, and portfolio choice.â The Review of Financial Studies, 17(3), 879â914.
Paper not yet in RePEc: Add citation now
- Piketty, T. (1997). âLa redistribution fiscale face au chômage.â Revue française dâéconomie, 12(1), 157â201.
Paper not yet in RePEc: Add citation now
- Piketty, T. (2014). âCapital in the 21st century.â Piketty, T., and Saez, E. (2013). âA theory of optimal inheritance taxation.â Econometrica, 81(5), 1851â1886.
Paper not yet in RePEc: Add citation now
Piketty, T., Saez, E., and Stantcheva, S. (2014). âOptimal taxation of top labor incomes: A tale of three elasticities.â American economic journal: economic policy, 6(1), 230â71.
- Rothschild, C., and Scheuer, F. (2013). âRedistributive taxation in the roy model.â The Quarterly Journal of Economics, 128(2), 623â668.
Paper not yet in RePEc: Add citation now
- Rothschild, C., and Scheuer, F. (2016). âOptimal taxation with rent-seeking.â The Review of Economic Studies, 83(3), 1225â1262.
Paper not yet in RePEc: Add citation now
Sachs, D., Tsyvinski, A., and Werquin, N. (2020). âNonlinear tax incidence and optimal taxation in general equilibrium.â Econometrica, 88(2), 469â493.
Saez, E. (2001). âUsing elasticities to derive optimal income tax rates.â The Review of Economic Studies, 68(1), 205â229.
Saez, E. (2002). âThe desirability of commodity taxation under non-linear income taxation and heterogeneous tastes.â Journal of Public Economics, 83(2), 217â230.
Saez, E., and Stantcheva, S. (2016). âGeneralized social marginal welfare weights for optimal tax theory.â American Economic Review, 106(1), 24â45.
Saez, E., and Stantcheva, S. (2018). âA simpler theory of optimal capital taxation.â Journal of Public Economics, 162, 120â142.
Saez, E., and Zucman, G. (2016). âWealth inequality in the united states since 1913: Evidence from capitalized income tax data.â The Quarterly Journal of Economics, 131(2), 519â578.
- Saez, E., and Zucman, G. (2019). The triumph of injustice: How the rich dodge taxes and how to make them pay. WW Norton & Company.
Paper not yet in RePEc: Add citation now
- Samuelson, P. A. (1948). âFoundations of economic analysis.â Scheuer, F., and Werning, I. (2017). âThe taxation of superstars.â The Quarterly Journal of Economics, 132(1), 211â270.
Paper not yet in RePEc: Add citation now
Seim, D. (2017). âBehavioral responses to wealth taxes: Evidence from sweden.â American Economic Journal: Economic Policy, 9(4), 395â421.
- Shourideh, A. (2012). âOptimal taxation of wealthy individuals.â Working Paper.
Paper not yet in RePEc: Add citation now
- Stantcheva, S. (2017). âOptimal taxation and human capital policies over the life cycle.â Journal of Political Economy, 125(6), 1931â1990.
Paper not yet in RePEc: Add citation now
- Stiglitz, J. E. (1982). âSelf-selection and pareto efficient taxation.â Journal of Public Economics, 17(2), 213â240.
Paper not yet in RePEc: Add citation now
- Verrecchia, R. E. (1982). âInformation acquisition in a noisy rational expectations economy.â Econometrica, 1415â1430.
Paper not yet in RePEc: Add citation now
- Werning, I. (2007). âPareto efficient income taxation.â mimeo, MIT.
Paper not yet in RePEc: Add citation now
- Yitzhaki, S. (1987). âThe relation between return and income.â The Quarterly Journal of Economics, 102(1), 77â95.
Paper not yet in RePEc: Add citation now
- Zemyan, S. M. (2012). The classical theory of integral equations: a concise treatment. Springer Science & Business Media.
Paper not yet in RePEc: Add citation now