Pareto-Improving Optimal Capital and Labor Taxes

• 成果类型: Article; Early Access
• 署名作者: Greulich, Katharina; Laczo, Sarolta; Marcet, Albert
• 署名单位: University of London; Queen Mary University London; Centre for Economic Policy Research - UK; Centre de Recerca en Economia Internacional (CREI); Pompeu Fabra University; Barcelona School of Economics; ICREA
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/723635
• 发表日期: 2023
• 关键词: optimal fiscal-policy; optimal taxation; equilibrium; COMMITMENT; EFFICIENCY; income; RISK

摘要

We study optimal Pareto-improving factor taxation when agents are heterogeneous in their labor productivity and wealth and markets are complete. Pareto-improving policies require a gradual reform: labor taxes should be cut, and capital taxes should remain high for a long time before reaching the limit. This policy redistributes wealth in favor of workers, promotes growth, and causes early deficits and government debt in the long run. We address several technical issues, such as sufficiency of Lagrangian solutions in a Ramsey problem, their relation to welfare functions, and solution algorithms. We also provide a proof that long-run capital taxes are zero.