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Optimal income transfers

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  • Louis Kaplow

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Abstract

A substantial literature addresses the design of transfer programs and policies, including the negative income tax, other means-tested transfers, the earned income tax credit, categorical assistance, and work inducements. This work is largely independent of that on the optimal nonlinear income tax, yet formulations of such a tax necessarily address how low-income individuals should be treated. This paper draws on the optimal income taxation literature to illuminate the analysis of transfer programs, including the level and shape of marginal tax rates (including phase-outs), the structure of categorical assistance, and the role of work inducements in an optimal income transfer scheme. Copyright Springer Science + Business Media, LLC 2007

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Bibliographic Info

Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 14 (2007)
Issue (Month): 3 (June)
Pages: 295-325

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Handle: RePEc:kap:itaxpf:v:14:y:2007:i:3:p:295-325

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Web page: http://www.springerlink.com/link.asp?id=102915

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Keywords: Categorical assistance; Income maintenance; Optimal taxation; Transfer programs; Welfare; Work requirements;

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Cited by:
  1. Guyonne Kalb & Thor Thoresen, 2010. "A comparison of family policy designs of Australia and Norway using microsimulation models," Review of Economics of the Household, Springer, vol. 8(2), pages 255-287, June.
  2. Matti Tuomala, 2010. "On optimal non-linear income taxation: numerical results revisited," International Tax and Public Finance, Springer, vol. 17(3), pages 259-270, June.
  3. Barrientos, Armando, 2012. "Social Transfers and Growth: What Do We Know? What Do We Need to Find Out?," World Development, Elsevier, vol. 40(1), pages 11-20.
  4. Gregory Acs & Eric Toder, 2007. "Should we subsidize work? Welfare reform, the earned income tax credit and optimal transfers," International Tax and Public Finance, Springer, vol. 14(3), pages 327-343, June.
  5. Robert Moffitt, 2005. "Welfare Work Requirements with Paternalistic Government Preferences," Economics Working Paper Archive 534, The Johns Hopkins University,Department of Economics, revised Jun 2006.
  6. Louis Kaplow, 2011. "An Optimal Tax System," NBER Working Papers 17214, National Bureau of Economic Research, Inc.

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