Redistributive capital taxation revisited

0533233 - NHU-C 2021 CZ eng V - Výzkumná zpráva
Kina, Ö. - Slavík, Ctirad - Yazici, H.
Redistributive capital taxation revisited.
Prague: CERGE-EI, 2020. 45 s. CERGE-EI Working Paper Series, 674. ISSN 1211-3298
Grant CEP: GA ČR(CZ) GA17-27676S
Institucionální podpora: Progres-Q24
Klíčová slova: capital taxation * capital-skill complementarity * inequality
Obor OECD: Applied Economics, Econometrics
https://www.cerge-ei.cz/pdf/wp/Wp674.pdf

This paper shows that capital-skill complementarity provides a quantitatively significant rationale to tax capital for redistributive governments. The optimal capital income tax rate is 60%, which is significantly higher than the optimal rate of 48% in an identically calibrated model without capital-skill complementarity. The skill premium falls from 1.9 to 1.67 along the transition following the optimal reform in the capital-skill complementarity model, implying substantial indirect redistribution from skilled to unskilled workers. These results show that a government that cares about redistribution should take into account capital-skill complementarity in production when setting the tax rate on capital income.
Trvalý link: http://hdl.handle.net/11104/0311684