IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01248159.html
   My bibliography  Save this paper

Optimal income taxation and the shape of average tax rates

Author

Listed:
  • Jean Hindriks

    (UCL - Université Catholique de Louvain = Catholic University of Louvain)

  • Etienne Lehmann

    (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - UP2 - Université Panthéon-Assas - CNRS - Centre National de la Recherche Scientifique)

  • Alexis Parmentier

    (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne)

Abstract

We investigate whether the optimal income tax model of Mirrlees (1971) can reproduce the empirically observed increasing average tax rates. We give a necessary condition and exhibit two examples where the optimal average tax rates are increasing. We wish to thank Mathias Hungerbühler and Laurence Jacquet for stimulating discussions. Citation: HINDRIKS, Jean, Etienne LEHMANN, and Alexis PARMENTIER, (2006) "Optimal income taxation and the shape of average tax rates.

Suggested Citation

  • Jean Hindriks & Etienne Lehmann & Alexis Parmentier, 2006. "Optimal income taxation and the shape of average tax rates," Post-Print hal-01248159, HAL.
    • Handle: RePEc:hal:journl:hal-01248159
    Note: View the original document on HAL open archive server: https://hal.univ-reunion.fr/hal-01248159
    as

    Download full text from publisher

    File URL: https://hal.univ-reunion.fr/hal-01248159/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Robin Boadway & Katherine Cuff & Maurice Marchand, 2000. "Optimal Income Taxation With Quasi‐Linear Preferences Revisited," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 435-460, October.
    2. Jesus Seade, 1982. "On the Sign of the Optimum Marginal Income Tax," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(4), pages 637-643.
    3. Boadway, Robin & Cuff, Katherine & Marchand, Maurice, 2000. "Optimal Income Taxation with Quasi-linear Preferences Revisited," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(4), pages 435-460.
    4. Emmanuel Saez, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(1), pages 205-229.
    5. Herwig Immervoll, 2004. "Average and Marginal Effective Tax Rates Facing Workers in the EU: A Micro-Level Analysis of Levels, Distributions and Driving Factors," OECD Social, Employment and Migration Working Papers 19, OECD Publishing.
    6. Immervoll, Herwig, 2004. "Average and marginal effective tax rates facing workers in the EU: a micro-level analysis of levels, distributions and driving factors (revised version of EM2/02)," EUROMOD Working Papers EM6/04, EUROMOD at the Institute for Social and Economic Research.
    7. Diamond, Peter A, 1998. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates," American Economic Review, American Economic Association, vol. 88(1), pages 83-95, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Boadway, Robin & Jacquet, Laurence, 2008. "Optimal marginal and average income taxation under maximin," Journal of Economic Theory, Elsevier, vol. 143(1), pages 425-441, November.
    2. Soumyanetra Munshi, 2011. "On existence of pure strategy equilibrium with endogenous income," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(1), pages 1-37, June.
    3. Lehmann, Etienne & Parmentier, Alexis & Van Der Linden, Bruno, 2011. "Optimal income taxation with endogenous participation and search unemployment," Journal of Public Economics, Elsevier, vol. 95(11), pages 1523-1537.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ebl:ecbull:v:8:y:2006:i:2:p:1-6 is not listed on IDEAS
    2. Li, Jinlu & Lin, Shuanglin, 2016. "Optimal income taxation with discrete skill distribution," Mathematical Social Sciences, Elsevier, vol. 83(C), pages 58-70.
    3. Laurence Jacquet & Etienne Lehmann, 2021. "Optimal Income Taxation with Composition Effects," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 1299-1341.
    4. Boadway, Robin & Jacquet, Laurence, 2008. "Optimal marginal and average income taxation under maximin," Journal of Economic Theory, Elsevier, vol. 143(1), pages 425-441, November.
    5. Mathias Hungerbühler & Etienne Lehmann & Alexis Parmentier & Bruno Van Der Linden, 2006. "Optimal Redistributive Taxation in a Search Equilibrium Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 743-767.
    6. Doligalski, Paweł & Rojas, Luis E., 2023. "Optimal redistribution with a shadow economy," Theoretical Economics, Econometric Society, vol. 18(2), May.
    7. Georges Casamatta, 2023. "Optimal income taxation with tax avoidance and endogenous labour supply," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 913-939, August.
    8. Felix FitzRoy & Jim Jin, 2017. "Higher Tax for Top Earners," Journal of Economics, Springer, vol. 122(2), pages 121-136, October.
    9. Masaaki Suzuki, 2014. "Debates on Individual Income Tax and Potential Japanese Tax Reforms," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 10(3), pages 371-396, October.
    10. Dingquan Miao, 2022. "Optimal Labor Income Taxation - The Role of the Skill Distribution," LIS Working papers 823, LIS Cross-National Data Center in Luxembourg.
    11. Laurent Simula, 2007. "Optimality conditions and comparative static properties of non-linear income taxes revisited," Working Papers halshs-00588074, HAL.
    12. Kanbur, Ravi & Tuomala, Matti, 2002. "Understanding The Evolution Of Inequality During Transition: The Optimal Income Taxation," Working Papers 7240, Cornell University, Department of Applied Economics and Management.
    13. Zoutman, Floris T. & Jacobs, Bas, 2016. "Optimal redistribution and monitoring of labor supply," Journal of Public Economics, Elsevier, vol. 135(C), pages 15-31.
    14. Laurent Simula & Alain Trannoy, 2020. "Bunching and Rank-Dependent Optimal Income Taxation," CESifo Working Paper Series 8443, CESifo.
    15. Michael Keen & Yitae Kim & Ricardo Varsano, 2008. "The “flat tax(es)”: principles and experience," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(6), pages 712-751, December.
    16. Massimo Morelli & Huanxing Yang & Lixin Ye, 2012. "Competitive Nonlinear Taxation and Constitutional Choice," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 142-175, February.
    17. Laurence Jacquet & Etienne lehmann & Bruno Van Der Linden, 2012. "Signing distortions in optimal tax or other adverse selection models with random participation," THEMA Working Papers 2012-27, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    18. Boone, Jan & Bovenberg, Lans, 2004. "The optimal taxation of unskilled labor with job search and social assistance," Journal of Public Economics, Elsevier, vol. 88(11), pages 2227-2258, September.
    19. Jacquet, Laurence & Lehmann, Etienne & Van der Linden, Bruno, 2013. "Optimal redistributive taxation with both extensive and intensive responses," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1770-1805.
    20. Laurent Simula & Alain Trannoy, 2023. "Bunching in rank-dependent optimal income tax schedules," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 60(1), pages 237-263, January.
    21. Laurence Jacquet & Dirk Van de Gaer, 2015. "Politiques fiscales optimales pour les bas revenus et principe de compensation," Revue économique, Presses de Sciences-Po, vol. 66(3), pages 579-600.

    More about this item

    Keywords

    Optimal taxation;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01248159. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.