Uninsurable investment risks and capital income taxation

Arbeitspapier

This paper studies the capital accumulation and welfare implications of reducing capital income taxation in a general equilibrium economy with uninsurable investment risks. It has been shown that, with uninsurable investment risks, under-accumulation of capital may result compared to the complete markets economy. We show that reducing somewhat the capital income tax rate increases the capital stock and leads to a welfare gain. The complete elimination of the capital income tax, however, is not necessarily welfare improving.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bank of Canada Working Paper ; No. 2009-3

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Consumption; Saving; Wealth ; Investment; Capital; Intangible Capital; Capacity ; Fiscal Policy ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Business Taxes and Subsidies including sales and value-added (VAT)
• Subject: Economic models ; Investitionsrisiko ; Kapitalertragsteuer ; Steuerbegünstigung ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Meh, Césaire A. ; Terajima, Yaz
• Event: Veröffentlichung
• (who): Bank of Canada
• (where): Ottawa
• (when): 2009

Further information

• DOI: doi:10.34989/swp-2009-3
• Handle: http://hdl.handle.net/10419/53853
• Last update: 10.03.2025, 11:46 AM CET