Optimum Taxation of Each Year's Income
In this paper, a two-type, two-period model of optimum income taxation is investigated. I assume full commitment and that current income determines the agents' tax burden in each period. It is shown that such a tax system does not allow one to implement the optimal long-term tax contract and that it implies positive marginal tax rates at the upper end of the income distribution. Copyright 2007 Blackwell Publishing, Inc..
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Volume (Year): 9 (2007)
Issue (Month): 1 (February)
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