Optimal tax policy boosts innovation and economic growth for all
The article explores the best way to tax capital, labor, and innovation to promote economic growth. It suggests that taxing capital in the short term is beneficial, but in the long term, it should earn its full value. Taxes on innovation and labor should always be lower than what they produce. Whether taxes on innovation should be positive or negative depends on government spending needs, innovation benefits, and patent holders' power. Optimal tax policies lead to significant welfare gains compared to other models.