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The Optimal Amount of Attention to Capital Income Risk and Heterogeneous Precautionary Saving Behavior

Yin, Penghui - 2019

uninsured capital income risk, and suffer from an information-processing capacity constraint. For given attention devoted to … capital income risk, we solve for the optimal consumption-saving choices and show that the expected welfare is increasing with … capacity, assuming a relative risk aversion degree larger than unity. Furthermore, we solve for attention choice and find that …

Persistent link: https://www.econbiz.de/10012892117

Optimal Income Taxation with Labor Supply Responses at Two Margins : When is an Earned Income Tax Credit Optimal?

Hansen, Emanuel - 2021

This paper studies optimal non-linear income taxation in a model with labor supply responses at the intensive (hours, effort) and extensive (participation) margins. It shows that an Earned Income Tax Credit (EITC) with negative marginal taxes and negative participation taxes at the bottom is...

Persistent link: https://www.econbiz.de/10013250261

Jointly Optimal Taxes for Different Types of Income

Hermle, Johannes - 2018

We develop and estimate a model of jointly optimal income taxes for different types of income. Compared to standard optimal tax formulas, optimal schedular income tax rates additionally depend on cross-elasticities between tax bases capturing fiscal externalities. We discuss two applications:...

Persistent link: https://www.econbiz.de/10012908643

Optimal Taxation of Robots

Thuemmel, Uwe - 2019

I study the optimal taxation of robots and labor income. In the model, robots substitute for routine labor and complement non-routine labor. I show that while it is optimal to distort robot adoption, robots may be either taxed or subsidized. The robot tax exploits general-equilibrium effects to...

Persistent link: https://www.econbiz.de/10012892266

Monopsony Power, Income Taxation and Welfare

Hummel, Albert Jan - 2021

This paper studies the implications of monopsony power for optimal income taxation and welfare. Firms observe workers’ abilities while the government does not and monopsony power determines what share of the labor market surplus is translated into profits. Monopsony power increases the tax...

Persistent link: https://www.econbiz.de/10013224073

Workforce or Workfare?

Brett, Craig - 2011

This article explores the use of workfare as part of an optimal tax mix when labor supply responses are along the extensive margin. Particular attention is paid to the interaction between workfare and an earned income tax credit, two policies that are designed to provide additional incentives...

Persistent link: https://www.econbiz.de/10013124395

Generalization of the Deaton Theorem : Piecewise Linear Income Taxation and Participation Decisions

Boadway, Robin W.; Cuff, Katherine - 2021

Deaton (1979) showed that if preferences are weakly separable in goods and labour and quasihomothetic in goods and the government imposes an optimal linear progressive tax, commodity taxes are redundant. Hellwig (2009) generalized the Deaton theorem by showing that the allocation obtained under...

Persistent link: https://www.econbiz.de/10013214339

Optimal Income Taxation Under Monopolistic Competition

Tarasov, Alexander; Zubrickas, Robertas - 2021

This paper is concerned with cross-dependencies between endogenous market structure and tax policy. We extend the Mirrlees (1971) model of income taxation with a monopolistic competition framework with general additively separable consumer preferences. We show that price and variety distortions...

Persistent link: https://www.econbiz.de/10013211731

Who Should Bear the Burden of COVID-19 Related Fiscal Pressure? An Optimal Income Taxation Perspective

Ayaz, Mehmet; Fricke, Lea; Fuest, Clemens; Sachs, Dominik - 2021

The COVID-19 pandemic has led to an increase in public debt in most countries. This will increase fiscal pressure in the future. We study how the shape of the optimal nonlinear income tax schedule is affected by this increase. We calibrate the workhorse optimal income tax model to five European...

Persistent link: https://www.econbiz.de/10013313446

Bunching and Rank-Dependent Optimal Income Taxation

Simula, Laurent - 2020

We consider optimal non-linear income tax problems when the social welfare function only depends on ranks as in Yaari (1987) and weights agree with the Lorenz quasi-ordering. Gini, S-Gini, and a class putting more emphasis on inequality in the upper part of the distribution belong to this set....

Persistent link: https://www.econbiz.de/10012827661