Frank A Cowell, Chang He and Dirk Van de gaer

Published 8 December 2017

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It is well known that taxes on the transfer of wealth typically raise very little revenue. However, this does not mean that they are ineffective as tools for redistribution. In this paper we show how important such taxes can be in the long-run distribution of wealth, reducing equilibrium inequality (the "predistribution" effect) by a much larger amount than what is apparent in terms of the immediate impact of the tax (the "redistribution" effect).