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Federal Reserve Bank of Minneapolis
Working Papers
Optimal Capital Taxation Revisited
V. V. Chari
Juan Pablo Nicolini
Pedro Teles
Abstract

We revisit the question of how capital should be taxed, arguing that if governments are allowed to use the kinds of tax instruments widely used in practice, for preferences that are standard in the macroeconomic literature, the optimal approach is to never distort capital accumulation. We show that the results in the literature that lead to the presumption that capital ought to be taxed for some time arise because of the initial confiscation of wealth and because the tax system is restricted.


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V. V. Chari & Juan Pablo Nicolini & Pedro Teles, Optimal Capital Taxation Revisited, Federal Reserve Bank of Minneapolis, Working Papers 752, 06 Jul 2018.
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Keywords: Capital income tax; Long run; Uniform taxation
DOI: 10.21034/wp.752
For corrections, contact Jannelle Ruswick ()
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