We consider optimal taxation in a model with wealth-poor and wealth-rich households, where wealth derives from business capital and home ownership, and investigate the consequences of a rising wealth inequality at steady state on these tax rates. The optimal tax structure includes some taxation of labor, zero taxation of financial and business capital, a housing wealth tax on the wealth-rich households and a housing subsidy on the wealth-poor households. When wealth inequality increases, the optimal balance between labor and housing wealth taxes depends on the source of the increasing wealth.

Optimal Taxation with Homeownership and Wealth Inequality / Reichlin, Pietro; Borri, Nicola. - In: REVIEW OF ECONOMIC DYNAMICS. - ISSN 1094-2025. - 40:(2021), pp. 64-84. [10.1016/j.red.2020.09.003]

Optimal Taxation with Homeownership and Wealth Inequality

PIETRO REICHLIN;Nicola Borri
2021

Abstract

We consider optimal taxation in a model with wealth-poor and wealth-rich households, where wealth derives from business capital and home ownership, and investigate the consequences of a rising wealth inequality at steady state on these tax rates. The optimal tax structure includes some taxation of labor, zero taxation of financial and business capital, a housing wealth tax on the wealth-rich households and a housing subsidy on the wealth-poor households. When wealth inequality increases, the optimal balance between labor and housing wealth taxes depends on the source of the increasing wealth.
2021
housing wealth, wealth inequality, optimal taxation.
Optimal Taxation with Homeownership and Wealth Inequality / Reichlin, Pietro; Borri, Nicola. - In: REVIEW OF ECONOMIC DYNAMICS. - ISSN 1094-2025. - 40:(2021), pp. 64-84. [10.1016/j.red.2020.09.003]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11385/196766
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