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UID:956b471b2553d46ec1b889753696197d
CATEGORIES:Seminars
CREATED:20171103T160357
SUMMARY:Burhanettin Kuruscu - University of Toronto
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Use It or Lose It: Efficiency Gains from Wealth Taxation (with Fatih Guvene
 n, Gueorgui Kambourov, Sergio Ocampo-Diaz and Daphne Chenk)\n\n\n \nAbstrac
 t:\n This paper studies the quantitative implications of wealth taxation (t
 ax on the stock of wealth) as opposed to capital income taxation (tax on th
 e income flow from capital) in an overlapping-generations incomplete-market
 s model with rate of return heterogeneity across individuals. With such het
 erogeneity, capital income and wealth taxes have opposite implications for 
 efficiency and some key distributional outcomes. Under capital income taxat
 ion, entrepreneurs who are more productive, and therefore generate more inc
 ome, pay higher taxes. Under wealth taxation, on the other hand, entreprene
 urs who have similar wealth levels pay similar taxes regardless of their pr
 oductivity, which expands the base and shifts the tax burden toward unprodu
 ctive entrepreneurs. This reallocation increases aggregate productivity and
  output. In the simulated model calibrated to the US data, a revenue-neutra
 l tax reform that replaces capital income tax with a wealth tax raises welf
 are by about 8% in consumption-equivalent terms. Moving on to optimal taxat
 ion, the optimal wealth tax is positive, yields even larger welfare gains t
 han the tax reform, and is preferable to optimal capital income taxes. Inte
 restingly, optimal wealth taxes result in more even consumption and leisure
  distributions (despite the wealth distribution becoming more dispersed), w
 hich is the opposite of what optimal capital income taxes imply. Consequent
 ly, wealth taxes can yield both efficiency and distributional gains.\n
DTSTAMP:20260405T152101Z
DTSTART:20171113T170000Z
DTEND:20171113T183000Z
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