This paper by Christophe Chamley analyzes the optimal tax on capital income in general equilibrium models with infinite lives and utility functions that are extensions of the Koopmans form. The key finding is that the optimal tax rate on capital income tends to zero in the long run, provided that the social and private discount rates are equal in the long run. The paper extends this result to a more general class of utility functions and discusses the implications for the capital income tax and bequest tax in economies with intergenerational transfers. It also examines the stability of the steady state along the dynamic path for additively separable utility functions, showing that the steady state is locally stable under certain conditions. The analysis provides insights into the efficiency of capital income taxation in the long run and the role of intergenerational transfers.This paper by Christophe Chamley analyzes the optimal tax on capital income in general equilibrium models with infinite lives and utility functions that are extensions of the Koopmans form. The key finding is that the optimal tax rate on capital income tends to zero in the long run, provided that the social and private discount rates are equal in the long run. The paper extends this result to a more general class of utility functions and discusses the implications for the capital income tax and bequest tax in economies with intergenerational transfers. It also examines the stability of the steady state along the dynamic path for additively separable utility functions, showing that the steady state is locally stable under certain conditions. The analysis provides insights into the efficiency of capital income taxation in the long run and the role of intergenerational transfers.