An international comparison of capital taxation
In this paper Lundberg and Nathell look at the capital income taxation across 30 OECD countries. Since households’ capital income taxes are not observed directly, they compute the average tax burden on capital income from aggregate statistics by dividing total capital tax revenue by total capital income. Their findings include (most data is from 2018):
- Among the 30 OECD countries for which data is available, the average tax burden on all types of capital income is 29 percent, with a range from 9 percent in Lithuania to 50 percent in Canada.
- English-speaking countries tend to have high capital taxes and Eastern European countries tend to have the lowest capital taxes.
Taxing Capital – an International Comparison
By: Jacob Lundberg, Johannes Nathell – Tax Foundation
Should capital be taxed at all?
It all depends on the intertemporal elasticity of substitution (IES)! In this paper, Straub and Werning, use a model where redistribution runs from capitalists to workers: capitalists save and derive all their income from the returns to capital, while workers supply one unit of labor inelastically and live hand-to-mouth, consuming their entire wage income plus transfers. The government taxes the returns to capital to pay for transfers targeted to workers and also allows for government debt. They find that capital taxation turns out to be especially potent in this setting: whenever the IES is less than 1, the optimal policy sets the tax rate at the upper bound forever.
Positive Long-Run Capital Taxation: Chamley-Judd Revisited
Authors: Ludwig Straub, Iván Werning
From: Harvard University, MIT
What do people think about taxes?
Is it that people have different perceptions about the economic cost of taxes? Is it that they think differently about the distributional impacts that tax changes will have? Or is it that they have very different views of what’s fair and what’s not? Could the reason be their views on the government—how wasteful or efficient they think the government is? Or is it purely a lack of knowledge about how the tax system works and what inequality is?
These are the questions Stefanie Stantcheva is trying to answer in this paper. She run two large-scale Social Economics surveys and experiments on representative samples of the U.S. population. She finds that for tax policy, a person’s views on fairness, and who’s going to gain and lose from tax changes completely dominates all other concerns. This is followed by a person’s views of the government. How much do they think the government should be doing, how efficient is it, how wasteful is it, how much do they trust it? Efficiency concerns are actually quite second-order in people’s minds when it comes to tax policy.
Understanding Tax Policy: How Do People Reason?
Author: Stefanie Stantcheva
From: Harvard University
