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Capital taxation in the Ramsey-Cass-Koopmans model. Consider a RamseyCass-Koopmans economy that is on its balanced growth path. Suppose that at some time, which we will call time 0 , the government switches to a policy of taxing investment income at rate τ. Thus the real interest rate that households face is now given by r(t)=(1-τ) f^'(k(t)) . Assume that the government returns the revenue it collects from this tax through lump-sum transfers. Finally, assume that this change in tax policy is una
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