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Optimal Piecewise Linear Income Taxation

Author

Listed:
  • Patricia Apps
  • Ngo Van Long
  • Ray Rees

Abstract

Given its significance in practice, the piecewise linear tax system seems to have received disproportionately little attention in the literature on optimal income taxation. This paper offers a simple and transparent analysis of its main characteristics.

Suggested Citation

  • Patricia Apps & Ngo Van Long & Ray Rees, 2009. "Optimal Piecewise Linear Income Taxation," CESifo Working Paper Series 2565, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_2565
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp2565.pdf
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    References listed on IDEAS

    as
    1. Peter Diamond & Emmanuel Saez, 2011. "The Case for a Progressive Tax: From Basic Research to Policy Recommendations," Journal of Economic Perspectives, American Economic Association, vol. 25(4), pages 165-190, Fall.
    2. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    3. Apps,Patricia & Rees,Ray, 2009. "Public Economics and the Household," Cambridge Books, Cambridge University Press, number 9780521716284.
    4. Bev Dahlby, 2008. "The Marginal Cost of Public Funds: Theory and Applications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262042509, May.
    5. Eytan Sheshinski, 1972. "The Optimal Linear Income-tax," Review of Economic Studies, Oxford University Press, vol. 39(3), pages 297-302.
    6. Slemrod, Joel & Yitzhaki, Shlomo & Mayshar, Joram & Lundholm, Michael, 1994. "The optimal two-bracket linear income tax," Journal of Public Economics, Elsevier, vol. 53(2), pages 269-290, February.
    7. Sheshinski, Eytan, 1989. "Note on the shape of the optimum income tax schedule," Journal of Public Economics, Elsevier, vol. 40(2), pages 201-215, November.
    8. J. A. Mirrlees, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Oxford University Press, vol. 38(2), pages 175-208.
    9. Stern, N. H., 1976. "On the specification of models of optimum income taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 123-162.
    10. Patricia Apps & Ray Rees, 2010. "Australian Family Tax Reform and the Targeting Fallacy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(2), pages 153-175.
    11. Robin Boadway, 1998. "The Mirrlees Approach to the Theory of Economic Policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(1), pages 67-81, February.
    12. Emmanuel Saez, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Oxford University Press, vol. 68(1), pages 205-229.
    13. Efraim Sadka, 1976. "On Income Distribution, Incentive Effects and Optimal Income Taxation," Review of Economic Studies, Oxford University Press, vol. 43(2), pages 261-267.
    14. Dahlby, Bev, 1998. "Progressive taxation and the social marginal cost of public funds," Journal of Public Economics, Elsevier, vol. 67(1), pages 105-122, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Apps, Patricia & Rees, Ray, 2012. "Optimal Taxation, Child Care and Models of the Household," IZA Discussion Papers 6823, Institute for the Study of Labor (IZA).
    2. Patricia Apps & Ray Rees, 2016. "Optimal Taxation, Income Inequality and the Household," CESifo Working Paper Series 5845, CESifo Group Munich.
    3. Alan Krause, 2014. "Piecewise Linear Income Tax Reforms," Discussion Papers 14/25, Department of Economics, University of York.
    4. Patricia Apps & Ray Rees, 2011. "Relational Contracts, Taxation and the Household," CESifo Economic Studies, CESifo, vol. 57(2), pages 245-258, June.
    5. Yuri Andrienko & Patricia Apps & Ray Rees, 2016. "Optimal taxation and top incomes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(6), pages 981-1003, December.
    6. Andrienko, Yuri & Apps, Patricia & Rees, Ray, 2014. "Optimal Taxation, Inequality and Top Incomes," IZA Discussion Papers 8275, Institute for the Study of Labor (IZA).
    7. Slack, Sean Edward, 2015. "Revisiting the optimal linear income tax with categorical transfers," Economics Letters, Elsevier, vol. 134(C), pages 73-77.
    8. Patricia Apps & Ray Rees, 2010. "Family labor supply, taxation and saving in an imperfect capital market," Review of Economics of the Household, Springer, vol. 8(3), pages 297-323, September.
    9. repec:kap:jeczfn:v:122:y:2017:i:2:d:10.1007_s00712-017-0557-1 is not listed on IDEAS
    10. Melanie Schröder & Norma Burow, 2016. "Couple's Labor Supply, Taxes, and the Division of Housework in a Gender-Neutral Lab," Discussion Papers of DIW Berlin 1593, DIW Berlin, German Institute for Economic Research.
    11. Vincenzo Prete & Alessandro Sommacal & Claudio Zoli, 2016. "Optimal Non-Welfarist Income Taxation for Inequality and Polarization Reduction," Working Papers 23/2016, University of Verona, Department of Economics.
    12. Felix FitzRoy & Jim Jin, 2017. "Higher Tax for Top Earners," Journal of Economics, Springer, vol. 122(2), pages 121-136, October.

    More about this item

    Keywords

    piecewise linear; income; taxation;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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