![Financial growth Financial growth](https://cepar.edu.au/sites/default/files/styles/medium/public/Capital_Income_Taxation.jpg?itok=Ks2Ac4SE)
Cagri Kumru and John Piggott
This paper studies the interaction between capital income taxation and a means tested age pension in the context of an overlapping generations model, calibrated to the UK economy.
Recent literature has suggested a rehabilitation of capital income taxation predicated on the idea that a capital income tax may be a partial substitute for the optimal age-based taxes when they are infeasible. This leads naturally to the conjecture that a publicly funded age pension contingent upon holdings of capital or capital income may have a similar effect. We formalize this using a stochastic OLG model with multiple individuals differentiated by labour productivity and pension entitlements.
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