# Taxing Capital? Not a Bad Idea after All!

@article{Conesa2006TaxingCN, title={Taxing Capital? Not a Bad Idea after All!}, author={Juan Carlos Conesa and Sagiri Kitao and Dirk Krueger}, journal={Labor: Public Policy \& Regulation}, year={2006} }

In this paper we quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic, uninsurable income shocks, where households also differ permanently with respect to their ability to generate income. The welfare criterion we employ is ex-ante (before ability is realized) expected (with respect to uninsurable productivity shocks) utility of a newborn in a stationary equilibrium. Embedded in this welfare criterion is a concern of the…

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