The Welfare Gains of Age Related Optimal Income Taxation
AbstractUsing a calibrated overlapping generations model we quantify the welfare gains of an age dependent income tax. Agents face uncertainty regarding future abilities and can by saving transfer consumption across periods. The welfare gain of switching from an age-independent to an age-dependent nonlinear tax amounts in our benchmark model to around three percent of GDP. The gains are particularly high when there are restrictions on debt policy. The gains of using a nonlinear- as opposed to a linear tax are even larger. Surprisingly, it is of secondary importance to optimally choose the tax on interest income.
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Bibliographic InfoPaper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2010:12.
Length: 48 pages
Date of creation: 25 Oct 2010
Date of revision:
Publication status: Published as Bastani, Spencer, Sören Blomquist and Luca Micheletto, 'The Welfare Gains of Age Related Optimal Income Taxation' in International Economic Review, 2013, pages 1219-1249.
Contact details of provider:
Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
Phone: + 46 18 471 25 00
Fax: + 46 18 471 14 78
Web page: http://www.nek.uu.se/
More information through EDIRC
labor income taxation; capital income taxation; age-dependent taxes; OLG model;
Other versions of this item:
- Spencer Bastani & Sören Blomquist & Luca Micheletto, 2013. "The Welfare Gains Of Age‐Related Optimal Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54, pages 1219-1249, November.
- Spencer Bastani & Sören Blomquist & Luca Micheletto, 2010. "The Welfare Gains of Age Related Optimal Income Taxation," CESifo Working Paper Series 3225, CESifo Group Munich.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-10-30 (Accounting & Auditing)
- NEP-AGE-2010-10-30 (Economics of Ageing)
- NEP-ALL-2010-10-30 (All new papers)
- NEP-DGE-2010-10-30 (Dynamic General Equilibrium)
- NEP-PBE-2010-10-30 (Public Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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"Gender Based Taxation and the Division of Family Chores,"
IZA Discussion Papers
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- Alberto Alesina & Andrea Ichino & Loukas Karabarbounis, 2007. "Gender Based Taxation and the Division of Family Chores," NBER Working Papers 13638, National Bureau of Economic Research, Inc.
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- The welfare gain from age-dependent taxation
by Economic Logician in Economic Logic on 2010-11-22 15:27:00
- Findeisen, Sebastian & Sachs, Dominik, 2014. "Efficient Labor and Capital Income Taxation over the Life Cycle," Working Papers 14-17, University of Mannheim, Department of Economics.
- Ooghe, Erwin & Peichl, Andreas, 2014. "Fair and efficent taxation under partial control," ZEW Discussion Papers 14-002, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Bastani, Spencer, 2012.
"Gender-Based and Couple-Based Taxation,"
Working Paper Series, Center for Fiscal Studies
2012:6, Uppsala University, Department of Economics.
- Bastani, Spencer, 2013. "Using the Discrete Model to Derive Optimal Income Tax Rates," Working Paper Series, Center for Fiscal Studies 2013:11, Uppsala University, Department of Economics.
- Lasse Frisgaard Gunnersen & Bo Sandemann Rasmussen, 2012. "Optimal Tax-Transfer Policies, Life-Cycle Labour Supply and Present-Biased Preferences," Economics Working Papers 2012-12, School of Economics and Management, University of Aarhus.
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