Original title: Redistributive capital taxation revisited
Authors: Kina, Ö. ; Slavík, Ctirad ; Yazici, H.
Document type: Research reports
Year: 2020
Language: eng
Series: CERGE-EI Working Paper Series, volume: 674
Abstract: This paper shows that capital-skill complementarity provides a quantitatively significant rationale to tax capital for redistributive governments. The optimal capital income tax rate is 60%, which is significantly higher than the optimal rate of 48% in an identically calibrated model without capital-skill complementarity. The skill premium falls from 1.9 to 1.67 along the transition following the optimal reform in the capital-skill complementarity model, implying substantial indirect redistribution from skilled to unskilled workers. These results show that a government that cares about redistribution should take into account capital-skill complementarity in production when setting the tax rate on capital income.
Keywords: capital taxation; capital-skill complementarity; inequality

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: https://www.cerge-ei.cz/pdf/wp/Wp674.pdf
Original record: http://hdl.handle.net/11104/0311662

Permalink: http://www.nusl.cz/ntk/nusl-432269


The record appears in these collections:
Research > Institutes ASCR > Economics Institute
Reports > Research reports