Leroux, Marie-Louise
[Université catholique de Louvain]
Ponthière, Grégory
[Université de Liège]
Pestieau, Pierre
[Université de Liège]
This paper studies the design of the optimal non linear taxation in an economy where
longevity varies across agents, and depends on three factors: longevity genes, health
investment and farsightedness. Provided earnings, farsightedness and genes are correlated,
governmental intervention can be justified on two grounds: correction for a lack of
farsightedness and redistribution across both earnings and genetic dimensions. Whether
longevity-enhancing spending should be subsidized or taxed is shown to depend on the
combined effects of myopia, self-selection and free-riding on the annuity returns. Our policy
conclusions depend also on how productivity and genes are correlated, on the
complementarity of genes and efforts in the survival function, and on how the government
weights the welfare of heterogeneous agents. All in all, it might be desirable to tax longevityenhancing
spending.
Bibliographic reference |
Leroux, Marie-Louise ; Ponthière, Grégory ; Pestieau, Pierre. Should we subsidize longevity?. CORE Discussion Papers ; 2008/58 (2008) 23 pages |
Permanent URL |
http://hdl.handle.net/2078.1/19670 |