Optimal taxation and the Domar‐Musgrave effect.
This article concerns the optimal choice of flat taxes on labor and capital income, and on consumption, in a tractable economic model in which agents are subject to idiosyncratic investment risk. We identify the tax rates which maximize welfare in stationary equilibrium while preserving tax revenue,...
| Publicado en: | Economic Inquiry Vol. 63; no. 4; pp. 1170 - 1201 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Oct2025
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| Acceso en línea: | Ver este registro en EBSCOhost |
| fields | @attributes: recordID: 1 pdfLink: plink: https://search.ebscohost.com/login.aspx?direct=true&db=ssf&AN=188606694&site=ehost-live header: @attributes: shortDbName: ssf uiTerm: 188606694 longDbName: Social Sciences Full Text (H.W. Wilson) uiTag: AN controlInfo: bkinfo: jinfo: jid: 00952583 EIQ jtl: Economic Inquiry issn: 00952583 maglogo: Y pubinfo: dt: Oct2025 vid: 63 iid: 4 pid: 480 pub: Wiley-Blackwell artinfo: ui: 188606694 10.1111/ecin.70007 ppf: 1170 ppct: 31 formats: fmt: – @attributes: type: T – @attributes: type: C – @attributes: type: P size: 2.5MB tig: atl: Optimal taxation and the Domar‐Musgrave effect. aug: au: Beare, Brendan K. Toda, Alexis Akira affil: School of Economics, University of Sydney, Sydney New South Wales,, Australia Department of Economics, Emory University, Atlanta Georgia,, USA su: Income Resource allocation Optimal taxation Consumption tax Investment risk Tax rates Capital gains sug: subj: Income Resource allocation Optimal taxation Consumption tax Investment risk Tax rates Capital gains keyword: consumption tax Domar‐Musgrave effect idiosyncratic investment risk optimal taxation wealth inequality consumption tax Domar‐Musgrave effect idiosyncratic investment risk optimal taxation wealth inequality ab: This article concerns the optimal choice of flat taxes on labor and capital income, and on consumption, in a tractable economic model in which agents are subject to idiosyncratic investment risk. We identify the tax rates which maximize welfare in stationary equilibrium while preserving tax revenue, finding that an increase in welfare equivalent to a permanent increase in consumption of nearly 7% can be achieved by only taxing capital income and consumption. The Domar‐Musgrave effect explains cases where it is optimal to tax capital income. We characterize the dynamic response to the substitution of consumption taxation for labor income taxation. pubtype: Academic Journal doctype: Article src: R language: English refInfo: copyright: @attributes: flag: N holdings: @attributes: islocal: N |
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