Taxing Uncertain Incomes
This paper studies nearly optimal income taxation when individuals are uncertain about their wages and when the government observes individual income with errors. Given the distribution of observed wage rates, it asks how the proportion of inequality known ex ante to individuals, or the proportion of observed inequality due to errors of observation, should affect optimal taxes. The taxes compared are nearly optimal for small inequality. First approximations to optimal taxes are found for these problems and also for the many-good optimal commodity tax problems. Among other results, it is found that wage uncertainty usually decreases the optimal earnings-tax rate and that errors of observation always do. Copyright 1990 by Royal Economic Society.
Volume (Year): 42 (1990)
Issue (Month): 1 (January)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://oep.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:oxecpp:v:42:y:1990:i:1:p:34-45. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.