Arbeitspapier

The Optimal Taxation of Risky Capital Income: The Rate of Return Allowance

We study the optimality of taxing capital income according to a Rate-of-Return Allowance proposed by the Mirrlees Review. In a mean-variance framework the optimal tax on risk-free returns is zero with constant returns to scale in private investment, but positive with decreasing returns to scale, and vice versa. The optimal tax rate on excess returns to risky assets is positive if the stochastic tax revenue is returned to the household by variable public good provision. If it is returned as a stochastic lump sum, the optimal tax on excess returns is irrelevant with only aggregate risk, and approaches 100 % if there is also idiosyncratic risk.

Sprache
Englisch

Erschienen in
Series: CESifo Working Paper ; No. 6297

Klassifikation
Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Thema
optimal capital taxation
rate of return allowance

Ereignis
Geistige Schöpfung
(wer)
Spiritus, Kevin
Boadway, Robin
Ereignis
Veröffentlichung
(wer)
Center for Economic Studies and ifo Institute (CESifo)
(wo)
Munich
(wann)
2017

Handle
Letzte Aktualisierung
20.09.2024, 08:26 MESZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Spiritus, Kevin
  • Boadway, Robin
  • Center for Economic Studies and ifo Institute (CESifo)

Entstanden

  • 2017

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