Income tax progressivity, physical capital, aggregate uncertainty and long-run growth in an OLG economy

► I study the growth-maximizing progressivity of income taxation in an OLG economy. ► I obtain conditions for a progressive income tax to reduce equilibrium growth. ► The model is calibrated to mimic some basic features of the US economy. ► Higher progressivity leads to lower growth and lower after-tax income inequality. ► Individual welfare depends on old agents' labor supply and the income tax design.