MARC Record from Library of Congress

LEADER: 03226cam a22003137a 4500
001 2007615520
003 DLC
005 20070807093140.0
007 cr |||||||||||
008 070723s2006 vau sb f000 0 eng
010 $a 2007615520
040 $aDLC$cDLC$dDLC
043 $an-us---
050 00 $aHB1
100 1 $aGrochulski, Borys.
245 10 $aRisky human capital and deferred capital income taxation$h[electronic resource] /$cBorys Grochulski, Tomasz Piskorski.
260 $a[Richmond, Va.] :$bFederal Reserve Bank of Richmond,$c[2006]
490 1 $aWorking paper ;$vno. 06-13
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on July 23, 2007
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"We study the structure of optimal wedges and capital taxes in a Mirrlees economy with endogenous skills. Human capital is a private state variable that drives the skill process of each individual. Building on the findings of the labor literature, we assume that human capital investment is a) risky, b) made early in the life-cycle, and c) hard to distinguish from consumption. These assumptions lead to the optimality of a) a human capital premium, i.e., an excess return on human capital relative to physical capital, b) a large intertemporal wedge early in the life-cycle stemming from the lack of Rogerson's [Econometrica, 1985] "inverse Euler" characterization of the optimal consumption process, and c) an intra-temporal distortion of the effort/consumption margin even at the top of the skill distribution at all dates except the terminal date. The main implication for the structure of linear capital taxes is the necessity of deferred taxation of physical capital. In particular, deferred taxation of capital prevents the agents from making a joint deviation of under-investing in human capital ex ante and shirking from labor effort at some future date in the life-cycle, as the marginal deferred tax rate on physical capital held early in the life-cycle is history-dependent. The average marginal tax rate on physical capital held in every period is zero in present value. Thus, as in Kocherlakota [Econometrica, 2005], the government revenue from capital taxation is zero. However, since a portion of the capital tax must be deferred, expected capital tax payments cannot be zero in every period. Necessarily, agents face negative expected capital tax payments due early in the life-cycle and positive expected capital tax payments late in the life-cycle. Also, relative to economies with exogenous skills, the optimal marginal wealth tax rate is more volatile."--Federal Reserve Bank of Richmond web site.
653 $aOptimal taxation;$aprivate information;$ahuman capital;$adeferred tax
700 1 $aPiskorski, Tomasz.
710 2 $aFederal Reserve Bank of Richmond.
830 0 $aWorking paper (Federal Reserve Bank of Richmond : Online) ;$vno. 06-13.
856 4 $uhttp://www.richmondfed.org/publications/economic_research/working_papers/pdfs/wp06-13.pdf$zhttp://www.richmondfed.org/publications/economic_research/working_papers/pdfs/wp06-13.pdf