Human Capital and the Income Tax

27 Pages Posted: 4 Apr 2011

See all articles by Louis Kaplow

Louis Kaplow

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

Date Written: March 1993

Abstract

This article examines how to treat human capital -- perhaps the vast majority of the capital stock -- under an ideal, Haig-Simons income tax. Innate ability, investments in human capital, and uncertainty in future earnings are considered. It is demonstrated that conventional income tax treatment and proposed modifications are closer to implementing a consumption tax than an income tax. Approximating ideal income tax treatment may be feasible, but assessing its desirability would require further inquiry.

Suggested Citation

Kaplow, Louis, Human Capital and the Income Tax (March 1993). NBER Working Paper No. w4299. Available at SSRN: https://ssrn.com/abstract=1801092

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