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Optimal Taxation of Human Capital and the Earnings Function

Jacobs, Bas; Bovenberg, A. Lans - 2021

This paper explores how the specification of the earnings function impacts the optimal tax treatment of human capital. If education is complementary to labor effort, education should be subsidized to offset tax distortions on labor supply. However, if most of the education is enjoyed by high...

Persistent link: https://www.econbiz.de/10013316559

Redistribution and Insurance with Simple Tax Instruments

Findeisen, Sebastian - 2015

We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear …

Persistent link: https://www.econbiz.de/10013020515