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Optimal marginal and average income taxation under maximin

  • Boadway, Robin
  • Jacquet, Laurence

Using the Mirrlees optimal income tax model under maximin, we derive fairly mild conditions for a decreasing marginal tax rate throughout the skill distribution with no bunching, a strictly concave tax function in income and a single-peaked average tax schedule. Assuming additive preferences and an isoelastic disutility of labor function, these tax profiles are implied by aggregate skills that are non-decreasing with the skill level. If preferences are quasilinear in leisure or in consumption, these tax profiles are also obtained under a large set of skill distributions.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 143 (2008)
Issue (Month): 1 (November)
Pages: 425-441

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Handle: RePEc:eee:jetheo:v:143:y:2008:i:1:p:425-441
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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