We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear … provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is …

We study the interactions between capital income tax and social security privatization in the context of rising … longevity. In an economy with idiosyncratic income shocks, redistributive defined benefit social security provides some … insurance against income uncertainty. This insurance comes at the expense of efficiency loss due to labor supply distortions …

optimum. In one implementation there is a common labor income tax schedule, and a repayment schedule for government loans … given out to agents during education. These repayment plans are contingent on loan size and income and capture the history … graduates as a function of income lies first strictly above their counterparts from high-school, but this reverses at higher …

influence future discussions of tax reform. Indeed, this can already be recognised in the Henry Review. As far as income … appropriate direction for reform is towards more progressive taxation of both labour earnings and capital income, although not …

producing human capital.We also demonstrate that this attenuation effect tends to concentrate generational consumption risk … into an i.i.d. generational consumption shock. In other words, each generation bears all of the risk associated with their …

model with idiosyncratic labor income risk. In our model economy, even a moderate earnings testing reduces individuals …

In this paper, we develop and numerically solve a model of idiosyncratic labour income and idiosyncratic interest rates … to predict the evolution of a wealth distribution over time. Stochastic labour income follows a deterministic growth …