This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Journal: Economic Policy: Vol. 3 No. 4 (November 2011)

Expand

Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Policy - All Issues

AEJ: Policy Forthcoming Articles

Capital Income Taxes with Heterogeneous Discount Rates

Article Citation

Diamond, Peter, and Johannes Spinnewijn. 2011. "Capital Income Taxes with Heterogeneous Discount Rates." American Economic Journal: Economic Policy, 3(4): 52-76.

DOI: 10.1257/pol.3.4.52

Abstract

With heterogeneity in both skills and discount factors, the Atkinson- Stiglitz theorem that savings should not be taxed does not hold. In a model with heterogeneity of preferences at each earnings level, introducing a savings tax on high earners or a savings subsidy on low earners increases welfare, regardless of the correlation between ability and discount factor. Extending Emmanuel Saez (2002), a uniform savings tax increases welfare if that correlation is sufficiently high. Key for the results is that types who value future consumption less are more tempted by a lower paid job. Some optimal tax results and empirical evidence are presented. (JEL D14, H21, H24)

Article Full-Text Access

Full-text Article

Additional Materials

Download Data Set (4.46 MB)

Authors

Diamond, Peter (MIT)
Spinnewijn, Johannes (London School of Economics and Political Science)

JEL Classifications

D14: Personal Finance
H21: Taxation and Subsidies: Efficiency; Optimal Taxation
H24: Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes

Comments

View Comments on This Article (0) | Login to post a comment


American Economic Journal: Economic Policy


Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)

Explore:

AEJ: Policy - All Issues

AEJ: Policy - Forthcoming Articles

Virtual Field Journals


AEA Member Login:


AEAweb | AEA Journals | Contact Us