This paper studies the e ects of agent heterogeneity on optimal capital income tax rates. In a two period model with arbitrarily many heterogeneous agents, we explicitly derive the welfare e ects of taxation depending on the distribution of the agents' characteristics. In particular, we show that the sign of the optimal capital income tax rate depends not on the extent of inequality in goods en...

We show that in models in which labor services are supplied jointly with human capital, the Chamley and Judd result on zero capital income taxation in the limit extends to labor taxes as long as accumulation technologies are constant returns to scale. Moreover, for a class of widely used preferences, consumption taxes are zero in the limit as well. However, we show by the construction of two ex...

A known result holds that capital taxes should be high in the short run and low or zero in the long-run steady state. This paper studies the dynamics of optimal capital taxation during the transition, when a high rate is no longer optimal but the economy is still in flux. The main result is that capital should be taxed whenever the sum of the elasticities of marginal utility with respect to con...

I quantitatively study the optimal capital income taxation in the general equilibrium overlapping generations model with uninsurable idiosyncratic income shocks and with housing and flnancial assets. Following key characteristics of housing are explicitly modeled: (i) housing is held for the dual purpose of consumption and savings, (ii) housing can be either owned or rented, (iii) if owned, hou...

The international mobility of capital and the geographical dispersion of firms have clear advantages for the growth and modernisation of the region. They also create fundamental challenges for national tax authorities. Modern principles of capital taxation for the open developing economy indicate the need to find the correct balance between the encouragement of private investment and the financ...