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Optimal income taxation : an example with a U-shaped pattern of optimal marginal tax rates

Year: 1994

Type: report

Abstract: Using the Mirrlees optimal income tax model with quasi-linear preferences, the paper examines conditions for marginal tax rates to be rising at high income levels and declining in an interval containing the modal skill. It examines conditions for the marginal tax rate to be higher at a low skill level than at the high skill level with the same density--an argument only holding for skill levels above a cutoff where resources of a worker are marginally of the same value as resources of the government. Data on earnings rates are presented. Copyright 1998 by American Economic Association.

Source: DSpace@MIT (Massachusetts Institute of Technology)

Author: Peter Diamond

Language: English

Topic: Economic and Fiscal Studies

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Reduced inequalities

Open Access status: green

OpenAlex ID: W3123500012

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Cited by: 646

Related to: 10