Wealth Taxes and Inequality

52 Pages Posted: 8 Aug 2018 Last revised: 15 Jan 2019

See all articles by Nicola Borri

Nicola Borri

LUISS University - Department of Economics and Finance

Pietro Reichlin

Luiss Guido Carli University - Department of Economics and Finance; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: January 14, 2019

Abstract

We analyze the long-run optimal combination of wealth and labor tax rates in a model where wealth-to-income ratios and wealth inequality are rising endogenously. We consider rich (lenders) and poor (borrowers) households, financial and housing wealth, and find that a ''realistic'' optimal steady state tax structure includes some taxation of labor, zero taxation of financial wealth, a housing wealth tax on rich households and a housing wealth subsidy on poor households. These findings are robust with respect to variations in the housing demand elasticity.

Keywords: housing wealth, wealth inequality, optimal taxation

JEL Classification: E21, E62, H2, H21, G1

Suggested Citation

Borri, Nicola and Reichlin, Pietro, Wealth Taxes and Inequality (January 14, 2019). Available at SSRN: https://ssrn.com/abstract=3217067 or http://dx.doi.org/10.2139/ssrn.3217067

Nicola Borri (Contact Author)

LUISS University - Department of Economics and Finance ( email )

viale Romania, 32
Rome, 00197
Italy

HOME PAGE: http://docenti.luiss.it/borri/

Pietro Reichlin

Luiss Guido Carli University - Department of Economics and Finance ( email )

Viale Romania, 32
Rome, 00197
Italy
390685225554 (Phone)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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