On the shape of optimal non-linear income tax schedule

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dc.contributor.author Tuomala, Matti -
dc.date.accessioned 2012-06-17T20:09:00Z
dc.date.available 2012-06-16 09:35:03 -
dc.date.available 2012-06-17T20:09:00Z
dc.date.issued 2006 -
dc.identifier.isbn 951-44-6634-9 -
dc.identifier.issn 1458-1191 -
dc.identifier.uri http://tampub.uta.fi/handle/10024/65471
dc.description.abstract This paper shows that the assumed distribution of earning abilities (wages) plays an important role in determining the optimal shape of non-linear income tax schedule. We replace the assumption of lognormal distribution used in several papers by the Champernowne distribution. Using numerical simulations we show that the U-shaped pattern of the marginal income tax rates can be obtained without assuming constant labour supply elasticity as in Diamond (1998) and Saez (2001). Our numerical results also suggest that it is either a sufficiently high inherent inequality or a combination of sufficiently high inherent inequality and sufficiently low revenue requirement that leads to a pattern of optimally increasing marginal tax rates. Furthermore, the paper also shows that the revenue requirement has a central role in determining the extent of redistribution and the level of the guaranteed minimum income. -
dc.format.extent 37 -
dc.language.iso en -
dc.publisher Tampereen yliopisto -
dc.title On the shape of optimal non-linear income tax schedule -
dc.type fi=Erillisteos | en=Monograph| -
dc.identifier.urn urn:isbn:951-44-6634-9 -
dc.type.version fi=Kustantajan versio | en=Publisher's version| -
dc.subject.okm fi=Kansantaloustiede | en=Economics| -
dc.oldstats 524 -
dc.seriesname.electronic Tampere Economic Working Papers Net Series
dc.relation.numberinserieselectronic 49/2006

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