Optimal taxation and the Domar‐Musgrave effect
在一个存在个体投资风险的模型中，研究了劳动收入、资本收入和消费税的最优选择，发现仅对资本收入和消费征税可使福利永久提高近7%，并解释了Domar-Musgrave效应为何支持资本收入税。
Abstract This article concerns the optimal choice of flat taxes on labor and capital income, and on consumption, in a tractable economic model in which agents are subject to idiosyncratic investment risk. We identify the tax rates which maximize welfare in stationary equilibrium while preserving tax revenue, finding that an increase in welfare equivalent to a permanent increase in consumption of nearly 7% can be achieved by only taxing capital income and consumption. The Domar‐Musgrave effect explains cases where it is optimal to tax capital income. We characterize the dynamic response to the substitution of consumption taxation for labor income taxation.