On the distributional effects of reducing capital taxes

• 成果类型: Article
• 署名作者: Domeij, D; Heathcote, J
• 署名单位: Stockholm School of Economics; Georgetown University
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/j.1468-2354.2004.00135.x
• 发表日期: 2004
• 页码: 523-554
• 关键词: Incomplete markets; idiosyncratic risk; income taxation; WEALTH; consumption; STATES; rates

摘要

This article asks whether household heterogeneity and market incompleteness have quantitatively important implications for the welfare effects of tax changes. We compare a representative-agent economy to an economy in which households face idiosyncratic uninsurable income risk. The income process is consistent with empirical estimates and implies a realistic wealth distribution. We find that capital tax cuts imply large welfare gains in the representative-agent economy. However, when households are heterogeneous, substantial redistribution during transition means that only a minority will support capital tax cuts, whereas most households can expect large welfare losses.