We revisit the question of how capital should be taxed, arguing that if governments are allowed to use the kinds of tax instruments widely used in practice, for preferences that are standard in the macroeconomic literature, the optimal approach is to never distort capital accumulation. We show that the results in the literature that lead to the presumption that capital ought to be taxed for some time arise because of the initial confiscation of wealth and because the tax system is restricted.
- Staff Report 571: Optimal Capital Taxation Revisited
- Bengui and Bianchi: Macroprudential Policy with Leakages
- Ai and Bhandari: Asset Pricing with Endogenously Uninsurable Tail Risk
- Cai and Heathcote: College Tuition and Income Inequality
- Benjamin and Wright: Deconstructing Delays in Sovereign Debt Restructuring
Subscribe to receive email alerts when economists from the Federal Reserve Bank of Minneapolis publish new Staff Reports, Working Papers or Economic Policy Papers. Occasionally other important news will be shared.