We examine the optimal taxation problem in a two sector neoclassical economy with workers and capitalists. We show that in a steady state of this economy the optimal policy may involve a capital income tax or subsidy, di§erential taxation of labour income and redistribution. The level and the direction of the redistribution associated with such an optimal policy depends on the pre tax allocation of capital but not on the social weights attached to the di§erent groups of taxpayers. Excess production of consumption goods creates a di§erence between the social marginal values of consumption and investment which in turns violates the production e¢ ciency condition. Such a di§erence can be undone by taxing capital income from the consumption sector, and with this optimal policy the government can implement a redistribution scheme where both workers and capitalists bear the burden of distorting taxes. On the contrary, an optimal policy that involves a capital income subsidy in the production of consumption can implement allocations that minimize the relative price di§erence between consumption and investment that resulted from the excess production of investment goods.
Mae Caerdydd yn un o brifddinasoedd ifancaf Ewrop. Mae’n gryno, gwyrdd, cyfeillgar a llawn bywyd, ac mae’n amgylchedd dosbarth cyntaf i fyw ac astudio ynddo.