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  Optimal Wealth Taxation When Wealth Is More Than Just Capital

Edenhofer, O., Franks, R. M. (2023): Optimal Wealth Taxation When Wealth Is More Than Just Capital. - FinanzArchiv - Public Finance Analysis, 79, 3, 175-207.
https://doi.org/10.1628/fa-2023-0011

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 Creators:
Edenhofer, Ottmar1, Author              
Franks, R. Maximilian1, Author              
Affiliations:
1Potsdam Institute for Climate Impact Research, Potsdam, ou_persistent13              

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 Abstract: We analyze the welfare implications of taxes on wealth, distinguishing between capital and land.We develop an overlapping generations model with heterogeneous agents and calibrate it to OECD data. We find that land rent taxes induce portfolio effects. Savings are shifted away from fixed land towards reproducible capital, enhancing GDP and reducing wealth inequality. Assuming a low pure rate of time preference, this can also raise social welfare, except under very low inequality aversion. By contrast, capital should be taxed only if inequality aversion is very high. We vary inequality aversion by considering three normative views: the Kaldor-Hicks criterion, prioritarian welfare functions and Rawlsian welfare functions.

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Language(s): eng - English
 Dates: 2022-12-142023-06-192023-11-092023-09
 Publication Status: Finally published
 Pages: 33
 Publishing info: -
 Table of Contents: -
 Rev. Type: Peer
 Identifiers: DOI: 10.1628/fa-2023-0011
PIKDOMAIN: RD3 - Transformation Pathways
Organisational keyword: RD3 - Transformation Pathways
PIKDOMAIN: Director / Executive Staff / Science & Society
Organisational keyword: FutureLab - Public Economics and Climate Finance
Organisational keyword: Director Edenhofer
Regional keyword: Europe
Research topic keyword: Economics
Research topic keyword: Inequality and Equity
Research topic keyword: Land use
MDB-ID: yes - 3486
 Degree: -

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Title: FinanzArchiv - Public Finance Analysis
Source Genre: Journal, SCI, Scopus
 Creator(s):
Franks, R. Maximilian1, Author            
Edenhofer, Ottmar1, Author            
Affiliations:
1 Potsdam Institute for Climate Impact Research, ou_persistent13            
Publ. Info: -
Pages: - Volume / Issue: 79 (3) Sequence Number: - Start / End Page: 175 - 207 Identifier: CoNE: https://publications.pik-potsdam.de/cone/journals/resource/finanzarchiv
Publisher: Mohr Siebeck