Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/215095
Authors: 
Franks, Max
Edenhofer, Ottmar
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper 8093
Abstract: 
We show how normative standpoints determine optimal taxation of wealth. Since wealth is not equal to capital, we find very different welfare implications of land rent-, bequest- and capital taxation. It is mainly land rents that should be taxed. We develop an overlapping generations model with heterogeneous agents and calibrate it to OECD data. We compare three normative views. First, the Kaldor-Hicks criterion favors the laissez-faire equilibrium. Second, with prioritarian welfare functions based on money-metric utility, high land rent taxes are optimal due to a portfolio effect. Third, if society disapproves of bequeathing, bequest taxation becomes slightly more desirable.
Subjects: 
optimal taxation
social welfare
wealth inequality
land rent tax
Georgism
JEL: 
D31
D63
E62
H21
H23
Q24
Document Type: 
Working Paper

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