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Ode Models Of Wealth Concentration And Taxation, Bruce Boghosian, Christoph Borgers
Ode Models Of Wealth Concentration And Taxation, Bruce Boghosian, Christoph Borgers
CODEE Journal
We refer to an individual holding a non-negligible fraction of the country’s total wealth as an oligarch. We explain how a model due to Boghosian et al. can be used to explore the effects of taxation on the emergence of oligarchs. The model suggests that oligarchs will emerge when wealth taxation is below a certain threshold, not when it is above the threshold. The underlying mechanism is a transcritical bifurcation. The model also suggests that taxation of income and capital gains alone cannot prevent the emergence of oligarchs. We suggest several opportunities for students to explore modifications of the model.