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Optimal top marginal tax rates under income splitting for couples

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  • Bach, Stefan
  • Corneo, Giacomo
  • Steiner, Viktor

Abstract

This paper analytically derives optimal top marginal tax rates when couples are taxed according to income splitting between spouses, consumption is taxed, and the skill distribution is unbounded. Optimal top marginal income tax rates are then quantified for Germany. Estimation results based on an exhaustive dataset of top taxpayers suggest that the optimal asymptotic tax rate is close to 2/3 and only applies to incomes that are considerably higher than those currently subject to the actual top tax rate.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8435.

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Date of creation: Jun 2011
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Handle: RePEc:cpr:ceprdp:8435

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Keywords: optimal income tax; top incomes;

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Citations

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Cited by:
  1. Aron Kiss, 2013. "Developments in the theory of optimal income taxation with applications to the Hungarian tax system," IEHAS Discussion Papers 1317, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  2. Loeffler, Max & Peichl, Andreas & Pestel, Nico & Schneider, Hilmar & Siegloch, Sebastian, 2012. "Effizient, einfach und gerecht: Ein integriertes System zur Reform von Einkommensteuer und Sozialabgaben," IZA Standpunkte 49, Institute for the Study of Labor (IZA).
  3. Normann Lorenz & Dominik Sachs, 2012. "Optimal Participation Taxes and Efficient Transfer Phase-Out," Working Paper Series of the Department of Economics, University of Konstanz 2012-37, Department of Economics, University of Konstanz.
  4. Dolls, Mathias & Peichl, Andreas & Zimmermann, Klaus F., 2011. "Eine Herausforderung für die G20: Global vereinbarte Schuldenbremsen und transnationale fiskalpolitische Aufsichtsgremien," IZA Standpunkte 45, Institute for the Study of Labor (IZA).
  5. Jakub Boratyński & Jakub Borowski, 2012. "The long-term economic impact of the flat tax in Poland. CGE simulation under alternative assumptions," Bank i Kredyt, National Bank of Poland, Economic Institute, vol. 43(3), pages 5-30.
  6. Loeffler, Max & Peichl, Andreas & Pestel, Nico & Schneider, Hilmar & Siegloch, Sebastian, 2011. "Einfach ist nicht immer gerecht: Eine Mikrosimulationsstudie der Kirchhof-Reform für die Einkommensteuer," IZA Standpunkte 44, Institute for the Study of Labor (IZA).
  7. Christopher Berka & Mathias Moser & Stefan Humer & Wilfried Altzinger, 2011. "Die langfristige Entwicklung der Einkommenskonzentration in Österreich 1957-2009. Teil 1: Literaturüberblick und Beschreibung der Daten," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 37(4), pages 513-530.
  8. Daianu, Daniel & Kallai, Ella & Lungu, Laurian, 2012. "Tax Policy under the Curse of Low Revenues: The Case of Romania (Part II)," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 143-162, June.

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