In a two-period world with endogenous savings and two assets, the optimal tax struc- ture and optimal diversification of aggregate (capital) risk between private and public consumption are analyzed. We show that there is no trade-off between efficiency in intertemporal consumption and allocation of risk; both goals are reached as long as labor supply is exogenous. This requires, however, taxing the excess return at a special tax rate. Optimally extending the dual income tax for risky capital income, accordingly, leads to a tax system with three tax bases: the triple income tax.

optimal taxation, aggregate risk, triple income tax
Efficiency; Optimal Taxation (jel H21)
Erasmus School of Economics

Schindler, D.S. (2008). Taxing Risky Capital Income – A Commodity Taxation Approach. Finanzarchiv, 64, 311–333. Retrieved from