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,...

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Bibliographic Details

Published in:	Economic Inquiry Vol. 63; no. 4; pp. 1170 - 1201
Main Authors:	Beare, Brendan K., Toda, Alexis Akira
Format:	Article
Published:	Wiley-Blackwell Oct2025
Subjects:	Income Resource allocation Optimal taxation Consumption tax Investment risk Tax rates Capital gains
Online Access:	View this record in EBSCOhost