On the Desirability of Taxing Capital Income to Reduce Moral Hazard in Social Insurance

Jacobs, Bas; Schindler, Dirk

On the Desirability of Taxing Capital Income to Reduce Moral Hazard in Social Insurance

Dateien

Schindler_9_4.pdfGröße: 330.04 KBDownloads: 842

Datum

2009

Autor:innen

Jacobs, Bas

Schindler, Dirk

URI (zitierfähiger Link)

http://nbn-resolving.de/urn:nbn:de:bsz:352-opus-88893

Link zur Lizenz

Attribution-ShareAlike 2.0 Generic

Open Access-Veröffentlichung

Open Access Green

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Working Paper/Technical Report

Publikationsstatus

Published

Zusammenfassung

This paper analyzes optimal linear taxes on labor income and savings in a standard two-period life-cycle model with endogenous leisure demands in both periods and non-insurable income risks. Households are subject to skill shocks in both periods of the life-cycle. We allow for completely general skill processes including those with persistence in skill shocks. We demonstrate that capital taxes are optimal since they reduce moral hazard in social insurance in two distinct ways: i) capital taxes reduce labor supply distortions on second-period labor supply, since second-period labor supply and saving are substitutes, ii) capital taxes reduce distortions in first-period labor supply by allowing for a lower level of labor taxes, although this effect is partially off-set because first-period labor supply and saving are complements. Capital taxes will be more attractive for social insurance if a larger part of risk is realized in the first period of the life-cycle. Our results suggest that taxing (retirement) saving is optimal to boost the retirement age and to reduce the tax-burden on working-age individuals.

Fachgebiet (DDC)

330 Wirtschaft

Schlagwörter

optimal capital taxation, risk, Atkinson-Stiglitz theorem

Zitieren

ISO 690

JACOBS, Bas, Dirk SCHINDLER, 2009. On the Desirability of Taxing Capital Income to Reduce Moral Hazard in Social Insurance

BibTex

@techreport{Jacobs2009Desir-11797,
  year={2009},
  title={On the Desirability of Taxing Capital Income to Reduce Moral Hazard in Social Insurance},
  author={Jacobs, Bas and Schindler, Dirk},
  note={First publ. as: CESifo Working Paper, No. 2806, 2009}
}

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Kommentar zur Publikation

First publ. as: CESifo Working Paper, No. 2806, 2009

Universitätsbibliographie

Ja