Optimal Marginal Tax Rates for Low Incomes: Positive, Negative, or Zero?
AbstractPrevious studies have shown that the optimal marginal tax rate at the bottom of the income distribution may be positive, negative, or even zero. This paper reexamines this problem in a unified framework and tries to evaluate the arguments. It turns out that the case for positive marginal tax rates is quite strong, whereas negative marginal tax rates seem to be based on a misconception.
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Bibliographic InfoPaper provided by Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät in its series Hannover Economic Papers (HEP) with number dp-255.
Length: 15 pages
Date of creation: May 2002
Date of revision:
Optimal income taxation; contract theory; incentives; welfare;
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