The Optimal Income Taxation of Couples as a Multi-dimensional Screening Problem PDF Download
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Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category : Couples
Languages : en
Pages : 42
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Book Description
Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category : Couples
Languages : en
Pages : 42
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Book Description
Author:
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Author: Henrik Jacobsen Kleven
Publisher:
ISBN:
Category : Couples
Languages : en
Pages : 76
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Book Description
This paper analyzes the optimal income tax treatment of couples. Each couple is modelled as a single rational economic agent supplying labor along two dimensions: primary and secondary earnings. We consider fully general joint income tax systems. Separate taxation is never optimal if social welfare depends on total couple incomes. In a model where secondary earners make only a binary work decision (work or not work), we demonstrate that the marginal tax rate of the primary earner is lower when the spouse works. As a result, the tax distortion on the secondary earner decreases with the earnings of the primary earner and actually vanishes to zero asymptotically. Such negative jointness is optimal because redistribution from two-earner toward one-earner couples is more valuable when primary earner income is lower. We also consider a model where both spouses display intensive labor supply responses. In that context, we show that, starting from the optimal separable tax schedules, introducing some negative jointness is always desirable. Numerical simulations suggest that, in that model, it is also optimal for the marginal tax rate on one earner to decrease with the earnings of his/her spouse. We argue that many actual redistribution systems, featuring family-based transfers combined with individually-based taxes, generate schedules with negative jointness.
Author: Sander Renes
Publisher:
ISBN:
Category :
Languages : en
Pages : 51
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We characterize the second-best allocation in a Mirrleesian optimal tax model where agents differ in multiple dimensions and the planner can tax multiple goods non-linearly. We develop a new method that allows us to solve the partial differential equations that describe the optimum regardless of the dimensionality of the problem. We derive four theoretical properties of the optimum. First, the optimal tax system is described by a multidimensional version of Diamond's (1998) and Saez' (2001) ABC-formula. Second, the Atkinson-Stiglitz theorem does not generalize to settings where the planner screens in multiple dimensions. Third, the optimal marginal tax rate on each good depends on the consumption level of multiple goods. Fourth, a no-distortion at the top/bottom result continues to hold. A calibrated simulation on taxation of couples shows a strong positive relationship between an individual's optimal marginal tax rate and the income earned by his spouse.
Author: Patricia Apps
Publisher: Cambridge University Press
ISBN: 0521887879
Category : Business & Economics
Languages : en
Pages : 303
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Book Description
Economic models in much of the public economics literature have been slow to reflect the significant changes towards double-income households throughout the developed world. This graduate-level text develops a more sophisticated approach to household economics, one that allows for multiple-income earners and shared decision-making. This approach is used to present a fundamentally new view of consumption. It then applies this to an analysis of tax systems, combining theoretical analysis of optimal taxation and tax reform with careful empirical study of the characteristics of income tax systems in four different countries: Australia, Germany, the UK and the USA. The book is particularly concerned with analysing, both theoretically and empirically, the impact of taxation on female labour supply, and identifying its effects on work incentives and fairness of income distribution. All this adds up to a fascinating new approach to the economics of household for researchers in both public and private sectors.
Author: Nicholas Barr
Publisher: Oxford University Press
ISBN: 0199885990
Category : Business & Economics
Languages : en
Pages : 763
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Book Description
Mandatory pensions are a worldwide phenomenon. However, with fixed contribution rates, monthly benefits, and retirement ages, pension systems are not consistent with three long-run trends: declining mortality, declining fertility, and earlier retirement. Many systems need reform. This book gives an extensive nontechnical explanation of the economics of pension design. The theoretical arguments have three elements: * Pension systems have multiple objectives--consumption smoothing, insurance, poverty relief, and redistribution. Good policy needs to bear them all in mind. * Good analysis should be framed in a second-best context-- simple economic models are a bad guide to policy design in a world with imperfect information and decision-making, incomplete markets and taxation. * Any choice of pension system has risk-sharing and distributional consequences, which the book recognizes explicitly. Barr and Diamond's analysis includes labor markets, capital markets, risk sharing, and gender and family, with comparison of PAYG and funded systems, recognizing that the suitable level of funding differs by country. Alongside the economic principles of good design, policy must also take account of a country's capacity to implement the system. Thus the theoretical analysis is complemented by discussion of implementation, and of experiences, both good and bad, in many countries, with particular attention to Chile and China.
Author: Kevin Spiritus
Publisher:
ISBN:
Category : Income distribution
Languages : en
Pages : 53
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We analyze the optimal nonlinear income tax schedule when taxpayers earn multiple incomes and differ along many unobserved dimensions. We derive the necessary conditions for the government's optimum using both a tax perturbation and a mechanism design approach, and show that both methods produce the same results. Our main contribution is to propose a numerical method to find the optimal tax schedule. Applied to the optimal taxation of couples, we find that optimal isotax curves are very close to linear and parallel. The slope of isotax curves is strongly affected by the relative tax-elasticity of male and female income. We make several additional contributions, including a test for Pareto efficiency and a condition on primitives that ensures the government's necessary conditions are sufficient and the solution to the problem is unique.
Author: Patricia Apps
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Bernard Salanie
Publisher: MIT Press
ISBN: 0262297817
Category : Business & Economics
Languages : en
Pages : 249
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Book Description
A concise and rigorous text that combines theory, empirical work, and policy discussion to present core issues in the economics of taxation. This concise introduction to the economic theories of taxation is intuitive yet rigorous, relating the theories both to existing tax systems and to key empirical studies. The Economics of Taxation offers a thorough discussion of the consequences of taxes on economic decisions and equilibrium outcomes, as well as useful insights into how policy makers should design taxes. It covers such issues of central policy importance as taxation of income from capital, environmental taxation, and tax credits for low-income families. This second edition has been significantly revised and updated. Changes include a substantially rewritten chapter on direct taxation; a discussion of recent research in the chapter on mixed taxation; the replacement of the chapter on capital taxation with a chapter on the “new dynamic public finance”; and considerations of environmental taxation in both theory and policy chapters. The book is aimed at graduate students or advanced undergraduates taking public finance classes as well as economists who want to learn more about the topic. It combines discussion of theory, empirical work, and policy objectives in compact form. Appendixes provide necessary background material on consumer and producer theory and the theory of optimal control.
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Category :
Languages : en
Pages :
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