Program > Papers by author > Reichlin Pietro

We analyze the long-run optimal combination of wealth and labor tax rates in a model with heterogeneous households (wealth-poor and wealth-rich), where wealth derives from business capital and homeownership. We find that the optimal steady state tax structure includes some taxation of labor, zero taxation of financial and business capital, a housing wealth tax on the wealth-rich households and a housing subsidy on the wealth-poor households. Finally, we investigate the consequences on these tax rates of a rising net wage-to-wealth ratio at steady state.