蝌蚪网 Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Capital Taxation under Political Constraints
蝌蚪网 Review
(pp. 2304–28)
Abstract
This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough coalition of citizens supports reform; thus, sustainable policies are those that will continue to attract enough political support in the future. We find that optimal marginal capital taxes are either progressive or U-shaped, so that savings are subsidized for the poor and/or the middle class but are taxed for the rich. U-shaped capital taxes always emerge when individuals' political behavior is purely determined by economic motives.Citation
Scheuer, Florian, and Alexander Wolitzky. 2016. "Capital Taxation under Political Constraints." 蝌蚪网 Review 106 (8): 2304–28. DOI: 10.1257/aer.20141081Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D14 Household Saving; Personal Finance
- D31 Personal Income, Wealth, and Their Distributions
- D72 Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- H21 Taxation and Subsidies: Efficiency; Optimal Taxation
- H25 Business Taxes and Subsidies including sales and value-added (VAT)