Activity: Talk or presentation types › Oral presentation › Professional
Description
For the coming years, the government in the Netherlands has announced a reform of the capital tax scheme: from the current scheme that taxes financial wealth towards a scheme that taxes capital income. This paper explores the economic and welfare effects of such a reform. I adopt different assumptions on the use of tax revenues, on household heterogeneity and on access to capital markets. In representative-agent versions of the model, the reform is found to be welfare-improving. In those versions that distinguish low wealth households from high wealth households, the reform continues to benefit the latter. Low wealth households, however, may be worse off on account of increased income volatility.