Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities
AbstractWe then analyze top income and top tax rate data in 18 OECD countries. There is a strong correlation between cuts in top tax rates and increases in top 1% income shares since 1975, implyingthat the overall elasticity is large. But top income share increases have not translated into higher economic growth, consistent with the zero-sum bargaining model. This suggests that the first elasticity is modest in size and that the overall effect comes mostly from the third elasticity. Consequently, socially optimal top tax rates might possibly be much higher than what is commonly assumed.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 78.
Date of creation: 2012
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Other versions of this item:
- Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2011. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," NBER Working Papers 17616, National Bureau of Economic Research, Inc.
- Piketty, Thomas & Saez, Emmanuel & Stantcheva, Stefanie, 2011. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," CEPR Discussion Papers 8675, C.E.P.R. Discussion Papers.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
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- NEP-ACC-2012-10-27 (Accounting & Auditing)
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- NEP-PBE-2012-10-27 (Public Economics)
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- Given the enormity of the short- and long-run fiscal challenges facing the US, the lack of policy detail from both presidential candidates is disappointing
by Blog Admin in British Politics and Policy at LSE on 2012-10-25 13:00:36
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