Arbeitspapier
Redistributive Capital Taxation Revisited
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.
- Language
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Englisch
- Bibliographic citation
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Series: CESifo Working Paper ; No. 8627
- Classification
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Wirtschaft
Aggregate Factor Income Distribution
Wage Level and Structure; Wage Differentials
- Subject
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capital taxation
capital-skill complementarity
inequality
redistribution
- Event
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Geistige Schöpfung
- (who)
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Kina, Özlem
Slavik, Ctirad
Yazici, Hakki
- Event
-
Veröffentlichung
- (who)
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Center for Economic Studies and Ifo Institute (CESifo)
- (where)
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Munich
- (when)
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2020
- Handle
- Last update
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10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Kina, Özlem
- Slavik, Ctirad
- Yazici, Hakki
- Center for Economic Studies and Ifo Institute (CESifo)
Time of origin
- 2020
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