This survey discusses how capital should be taxed in advanced economies. We review the theoretical optimal tax literature, survey empirical studies on the distribution of capital and the distortionary costs of capital taxation, and analyze the desirability of speciﬁc taxes on capital income, wealth, property, inheritances, and corporate proﬁts. Our overall conclusion is that capital taxation plays an important role in an optimal tax system, but only certain ways of taxing capital are able to strike a balance between optimality and administrative feasibility.
Journal of Economic Surveys
How Should Capital be Taxed?