Wealth Distribution and Taxation - DARP
Wealth Distribution and Taxation - DARP
Wealth Distribution and Taxation - DARP
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Simplified model (1)<br />
• Focus on the role of consumption<br />
• family features absent<br />
• interaction between intra-/inter-generational factors<br />
• (Champernowne-Cowell 1998, Cowell 2012 )<br />
• A model of single person-dynasties:<br />
• person inherits `q years after attaining adulthood<br />
• dies `q years after inheritance<br />
• leaves all his terminal wealth to one descendant<br />
• Resources<br />
• all get the same earnings, e(q ) at age q<br />
• but people may differ in terms of inherited wealth<br />
• <strong>Taxation</strong>:<br />
• could introduce income or wealth taxes in model<br />
• here focus on wealth-transfer taxation<br />
• simple piecewise linear tax on bequests<br />
• wealth left in excess of W * taxed at rate t<br />
11 February 2012 Frank Cowell: EC426 32
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