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More on the Optimal Taxation of Capital

V. V. Chari, Pedro Teles, Juan Pablo Nicolini

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Abstract

Should capital income taxes be zero in the long run, as argued by Chamley (1986) and Judd (1985)? Or should instead capital be heavily taxed as suggested by Straub and Werning (2015)? We revisit the Ramsey literature on the optimal taxation of capital and make again the case for a low, possibly zero, tax on capital income.

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Should capital income taxes be zero in the long run, as argued by Chamley (1986) and Judd (1985)? Or should instead capital be heavily taxed as suggested by Straub and Werning (2015)? We revisit the Ramsey literature on the optimal taxation of capital and make again the case for a low, possibly zero, tax on capital income.

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Available abstract

Should capital income taxes be zero in the long run, as argued by Chamley (1986) and Judd (1985)? Or should instead capital be heavily taxed as suggested by Straub and Werning (2015)? We revisit the Ramsey literature on the optimal taxation of capital and make again the case for a low, possibly zero, tax on capital income.

Key concepts: Capital (architecture), Capital income, Economics, Zero (linguistics), Monetary economics, Physical capital, Microeconomics, International taxation

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