Efficient Taxation with Differential Risks of Dependence and Mortality

Nishimura, Yukihiro;Pestieau, Pierre
(2016) Economics Bulletin — Vol. 36, n° 1, p. 52-57 (2016)

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  • Nishimura, YukihiroOsaka University
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  • Pestieau, PierreUliège
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Abstract
The purpose of this note is to analyze the optimal tax and transfer policies that should be conducted in a society where individuals differ according to their productivity and their risk of mortality and dependency. We show that according to the most reasonable estimates of correlation among these three characteristics, an optimal policy should consist of a tax on earning and second period consumption and of a subsidy on long term care spending. Also, the implicit tax on saving is positive.
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Nishimura, Y., & Pestieau, P. (2016). Efficient Taxation with Differential Risks of Dependence and Mortality. Economics Bulletin, 36(1), 52-57. https://hdl.handle.net/2078.5/185689 (Original work published 2016)