Supply Side Interventions and Redistribution", working paper Universitat Pompeu Fabra, n

We evaluate the e¤ect on welfare of shifting the burden of capi-tal income taxes to labor taxes in a dynamic equilibrium model with heterogeneous agents and constant tax rates. We calibrate and simu-late the economy; we \u85nd that lowering capital taxes has two e¤ects: i) it increases e ¢ ciency in terms of aggregate production, and ii) it redistributes wealth in favor of those agents with a low wage/wealth ratio. When the parameters of the model are calibrated to match the distribution of income in terms of the wage/wealth ratio, the redis-tributive e¤ect dominates, and agents with a high wage/wealth ratio would experience a large loss in utility if capital income taxes were eliminated. We are thankful to the editor, A. Scott, and two anonymous referees. N. Guner, V