Ottmar Edenhofer, Linus Mattauch, Jan Siegmeier

Hypergeorgism: When Rent Taxation Is Socially Optimal

Section: Articles
FinanzArchiv (FA)

Volume 71 () / Issue 4, pp. 474-505 (32)

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Imperfect altruism between generations may lead to insufficient capital accumulation. We study the welfare consequences of taxing the rent on a fixed production factor, such as land, in combination with age-dependent redistributions as a remedy. Taxing rent enhances welfare by increasing capital investment. This holds for any tax rate and recycling of the tax revenues except for combinations of high taxes and strongly redistributive recycling. We prove that specific forms of recycling the land rent tax – a transfer directed at fundless newborns or a capital subsidy – allow reproducing the social optimum under parameter restrictions valid for most economies.

Ottmar Edenhofer No current data available.

Linus Mattauch No current data available.

Jan Siegmeier No current data available.