On the Optimal Taxation of Capital Income

  title={On the Optimal Taxation of Capital Income},
  author={Larry E. Jones and Rodolfo E. Manuelli and Peter E. Rossi},
One of the best known results in modern public finance is the Chamley-Judd result showing that the optimal tax rate on capital income is zero in the long-run. In this paper, we reexamine this result by analyzing a series of generalizations of the Chamley-Judd formulation. We show that in a model with human capital, if the tax code is sufficiently rich and there are no pure profits from accumulating human capital, then all distorting taxes are zero in the long-run under the optimal plan. In this… 
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