New study reveals optimal taxation strategy for economic stability and growth
The study explores optimal taxation in economies with different types of people and preferences. They find that in the long run, it's best not to tax capital, but to issue debt instead. The optimal capital tax is only needed during the transition period and depends on how people save money over time. The researchers show that taxing capital in the steady state doesn't fix the main problem, so it's better to use debt to manage the economy.