We consider the optimal control of inequality under uncertainty, with a particular focus on income inequality. For an economy experiencing economic growth and random shocks, we show how a simple loss and `bequest' function may be combined to guide the expected level of inequality towards a...

This paper uses the unique Taxpayer Compliance Measurement Program (TCMP) micro data to study the equity effects of noncompliance. We access four years of TCMP data, 1979,1982,1985, and 1988. The TCMP data allows us to observe income and taxes before and after a tax audit. In order to generate a...

A switch from any given income tax schedule to a differentiated tax structure in which two groups of taxpayers are treated differently, each still facing the same local degree of progression, can induce an increase in welfare despite causing horizontal inequity. We demonstrate this result in a...