This paper analyzes optimal progressive capital income taxation in an infinite horizon model where individuals differ only through their initial wealth. We show that, in that context, progressive taxation is a much more powerful and efficient tool to redistribute wealth than linear taxation on...

This white paper report provides Revenue, Economic, and Constitutional Analysis of the proposed California Tax on Extreme Wealth (ACA 8 & AB 310) and also a Plain-English Summary Outline of its major provisions

This paper uses data from the largest tax preparer in the United States to estimate the impact of the "saver's credit," aUSfederal program providing financial incentives to encourage retirement savings, on the decision to contribute to an IRA. It finds significant, but very modest, effects. This...

Recent estimates of US top wealth shares obtained by capitalizing income tax returns (Saez and Zucman, 2020; Smith, Zidar and Zwick, 2022) are close in both levels and trends except for the top 0.01% where a large discrepancy remains. We examine this difference and, using public data, quantify three...

This paper describes the optimal level of government purchases in the presence of unemployment. The theoretical framework is a general-equilibrium matching model in which government purchases are valuable. When the unemployment gap is zero, the conventional Samuelson formula is valid. Otherwise,...

This paper extends Samuelson's theory of optimal government purchases by considering the contribution of government purchases to macroeconomic stabilization. We consider a matching model in which unemployment can be too high or too low. We derive a sufficient-statistics formula for optimal...

In recent decades, advanced economies have experienced low and stable inflation and long periods of liquidity trap. We construct an alternative business-cycle model capturing these two features by adding two assumptions to a money-in-the-utility-function model: the labor market is subject to...

This paper develops a theory of optimal capital taxation that expresses optimal tax formulas in sufficient statistics. We first consider a simple model with utility functions linear in consumption and featuring heterogeneous utility for wealth. In this case, there are no transitional dynamics,...

This paper develops a theory of optimal capital taxation that expresses optimal tax formulas in sufficient statistics. We first consider a simple model with utility functions linear in consumption and featuring heterogeneous utility for wealth. In this case, there are no transitional dynamics,...

This paper describes the optimal level of government purchases in the presence of unemployment. The theoretical framework is a general-equilibrium matching model in which government purchases are valuable. When the unemployment gap is zero, the conventional Samuelson formula is valid. Otherwise,...