Rethinking capital and wealth taxation

From Thomas Piketty and Emmanuel Saez:

This paper reviews recent developments in the theory of optimal capital taxation. We emphasize three main rationales for capital taxation. First, the frontier between capital and labor income flows is often fuzzy, thereby lending support to a broad-based, comprehensive income tax. Next, the very notions of income and consumption flows are difficult to define and measure for top wealth holders. Therefore the proper way to tax billionnaires is a progressive wealth tax. Finally, there are strong meritocratic reasons why we should tax inherited wealth more than earned income or self-made wealth (for which individuals can be held responsible, at least in part). This implies that the ideal fiscal system should also entail a progressive inheritance tax, in addition to progressive income and wealth taxes. We then confront our prescriptions with historical experience. Although there are significant differences, we argue that observed fiscal systems in modern democracies bear important similarities with this ideal tryptic.

About ozidar

I'm an Assistant Professor of Economics at the University of Chicago Booth School of Business and a Faculty Research Fellow at National Bureau of Economic Research. You can follow me on twitter @omzidar.
This entry was posted in Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

2 Responses to Rethinking capital and wealth taxation

  1. Nathanael says:

    Wow. Piketty & Saez continue to do the only important work in economics today.

  2. Pingback: Impuesto a las Herencias: Comparación entre Ecuador, EE.UU., Bélgica y Chile | Ecoamazonico

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s