Abstract

http://ssrn.com/abstract=10234
 
 

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On the Divergence Between 'Ideal' and Conventional Income Tax Treatment of Human Capital


Louis Kaplow


Harvard Law School; National Bureau of Economic Research (NBER)


AMERICAN ECONOMIC REVIEW, May 1996.

Abstract:     
A substantial majority of all capital is human capital, and most revenue from the income tax is from returns on human capital, wage income. Nevertheless, work analyzing the comprehensive, accrual ("ideal") income taxation of capital has focused on physical and financial capital. Applying the learning from this work to human capital suggests that human capital is significantly undertaxed under a conventional income tax, the actual result being close to what would be appropriate under a wage or consumption tax. This undertaxation does not, however, directly alter the marginal return to investments in human capital, although it does affect intertemporal behavior and bear on the interpretation of arguments about whether income is a distributively appealing base for taxation.

JEL Classification: H21, H24

Accepted Paper Series


Not Available For Download

Date posted: December 2, 1996  

Suggested Citation

Kaplow, Louis, On the Divergence Between 'Ideal' and Conventional Income Tax Treatment of Human Capital. AMERICAN ECONOMIC REVIEW, May 1996.. Available at SSRN: http://ssrn.com/abstract=10234

Contact Information

Louis Kaplow (Contact Author)
Harvard Law School ( email )
1575 Massachusetts Avenue
Cambridge, MA 02138
United States
617-495-4101 (Phone)
617-496-4880 (Fax)
HOME PAGE: http://www.law.harvard.edu/faculty/directory/facdir.php?id=32&show=bibliography
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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