Human capital and optimal positive taxation of capital income

@article{Jacobs2005HumanCA,
  title={Human capital and optimal positive taxation of capital income},
  author={Bas Jacobs and Ary Lans Bovenberg},
  journal={International Tax and Public Finance},
  year={2005},
  volume={17},
  pages={451-478}
}
This paper analyzes optimal linear and non-linear taxes on capital and labor incomes in a life-cycle model of human capital investment, financial savings, and labor supply with heterogenous individuals. A dual income tax with a positive marginal tax rate on not only labor income but also capital income is optimal. The positive tax on capital income serves to alleviate the distortions of the labor tax on human capital accumulation. The optimal marginal tax rate on capital income is lower than… Expand
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