Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/200773 
Year of Publication: 
2015
Citation: 
[Journal:] KDI Journal of Economic Policy [ISSN:] 2586-4130 [Volume:] 37 [Issue:] 3 [Publisher:] Korea Development Institute (KDI) [Place:] Sejong [Year:] 2015 [Pages:] 1-30
Publisher: 
Korea Development Institute (KDI), Sejong
Abstract: 
Based on a quantitative, heterogeneous agent general equilibrium model, we compute the optimal tax rates for labor and capital incomes for the Korean economy. According to our model, a more progressive income tax schedule along with a higher capital tax rate can increase average welfare by as much as 0.86% of permanent consumption. Approximately 64% of house-holds, those with low assets and low productivity, are better off when a more progressive optimal tax schedule is adopted. Despite the potentially significant welfare gains, our calculation should be interpreted with caution because our benchmark model does not take into account possible capital outflows or the increased administrative costs associated with high taxes.
Subjects: 
Inequality
Korean Economy
Optimal Income Taxes
Progressivity Capital Tax
JEL: 
E25
E62
H21
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article

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