The optimal capital income tax is analyzed in the framework of intertemporal eﬀicient taxation. The relation between the zero tax in the long-run and the equality between private and social discount rates is emphasized. The properties of the dynamic second best path described for a speciﬁc example (convergence to a steady state and values of the capital income tax in the transition). The case where wealth is a speciﬁc utility argument is also considered.
Chamley, Christophe, "Optimal Taxation of Capital Income in Economies with Identical Private and Social Discount Rates" (1984). Cowles Foundation Discussion Papers. 932.