A Collective Treatment of Individual Investors

We study how capital investors are treated in a society that includes, but is not limited to, investors. We show that investors are taxed, which causes inefficiently low investments, under poor economic conditions, whereas are subsidized, which causes inefficiently high investments, under good economic conditions. We also show that in an environment where households vote domestically but can invest across borders, candidates' race to attract revenues from foreign investors stops short of subsidizing investors. This results in a laissez-faire policy with no redistribution when the economies are identical. When the economies are sufficiently heterogeneous, candidates in the economy with higher investment returns propose a tax on investors