| Chapter 1 studies optimal taxation of capital and labor in general equilibrium using a calibrated overlapping generations (OLG) economy. Allowing for very general non-linear separate schedules of capital and labor income taxes, I quantitatively solve for the optimal taxes. The results show that capital and labor should be taxed quite differently. While all labor is taxed at close to a 12 percent flat rate, relative to marginal rates of over 30 percent today, most capital income is exempt from taxation. The optimal marginal tax rates on capital holdings above ;Chapter 2 shows that, allowing for permanent and transitory income shocks, mean VSLs follow an inverted-U shape over the life cycle for most of the population. Substantial heterogeneity, however, exists across agents with different productivities and assets. At age 45, the mean VSL is one-third larger than the median, and the 95th percentile VSL is about 12 times the 5th percentile VSL. The model provides a unified theoretical justification for a variety of recent empirical findings: the VSL-income elasticity, the black-white VSL gap and the male-female VSL gap.;Chapter 3 solves for optimal non-linear taxes on consumption in an OLG model with idiosyncratic risk. Consumption taxes, as well as income and labor taxes, can be progressive. I find the optimal progressive consumption tax is very redistributive. Marginal rates of taxation on additional consumption rise until over... |
