A theoretical Argument in favor of Tax Exemption of Over-Time Labor[Une justification théorique de la défiscalisation des heures supplémentaires : la macrojustice de Kolm]

Tax exemption on overtime labor must be understood as a radical change in the taxation of labor's income. More precisely, it means that individual productive capacities become the genuine tax base. The key idea behind this rule would be to make income tax more efficient by increasing incentives to work for individuals. Moreover, this point was emphasized at the time of his recent adoption in France. However it remains problematic to notice that, in spite of the importance of such a change, the exemption on overtime labor does not rely on a well-defined theoretical framework. This paper aims at presenting and analyzing one of the major specificities of the Equal Labor Income Equalization model (or ELIE model) proposed by Kolm (2005): it provides a theoretical argument for such a form of tax exemption. Aiming to reach a redistribution which would be both fair and perfectly efficient, Kolm's model appears indeed as a transposition of the optimal taxation theory.