In this paper we employ a tax-competition model to demonstrate that in the presence of migration the re-distributive advantage of a non-linear income tax system over a linear (flat) one is significantly mitigated relative to the autarky (no-migration) equilibrium. When migration threats are...

This paper provides evidence of efficient taxation of groups with heterogeneous levels of ‘tax morale'. We set up an optimal income tax model where high tax morale implies a high subjective cost of evading taxes. The model predicts that ‘nice guys finish last': groups with higher tax morale...

In this paper we extend the zero tax at the top result obtained in the closed economy case with bounded skill distributions for the case of unbounded skill distributions in the presence of international labor mobility and tax competition. We show that in the equilibrium for the tax competition...

Previous estimates of inequality of opportunity (IOp) are lower bounds because of the unobservability of the full set of endowed characteristics beyond the sphere of individual responsibility. Knowing the true size of unfair IOp, however, is important for the acceptance of (some) inequality and...

This paper analyzes optimal linear commodity taxes joint with non-linear income taxes. We provide optimal tax rules based on empirically observable elasticities. We demonstrate that commodities should be taxed/subsidized if doing so boosts labor supply. The critical role of commodity taxation is...

This paper analyses the development of the ratio of corporate taxes to wage taxes using a simple political economy model with internationally mobile and immobile firms. Among other results, our model predicts that countries reduce their corporate tax rate, relative to the wage tax, either when...

Theoretical discussion on compensating mechanisms involving the Pareto criterion that address inequality rather than absolute welfare is non-existent in trade literature. In a simple HOS model we consider tax-transfer policies that keep the pre-trade degree of inequality unchanged between...

In this paper we introduce an analytical framework for analyzing the effect of permanent income tax reductions on emigration and conduct an empirical analysis of their impact, based on the Israeli tax reductions during 2004-2010. We find that permanent tax reductions reduce the emigration flows...

We solve a large class of multidimensional adverse selection problems with one observed action, to derive the nonlinear optimal income tax schedule when individuals differ along multiple unobserved characteristics. Based on a perturbation of the optimal allocation, our method allows individuals...

The semi-dual income tax typically combines a progressive tax schedule for labour and pension income with low and often flat and differentiated nominal tax rates on some forms of capital income. This paper discusses the rationale for the adoption of semi-dual income tax in the taxation of...