We consider a model of prejudice-driven discrimination, where the advantaged 'tall' discriminate against the disadvantaged 'short'. We employ an egalitarian social welfare function to compare anti-discrimination legal rules with a non-discriminatory ('height-blind') income tax.

In a unionised labour market, a substitution of a payroll for an income tax will not alter employment if tax obligations are fulfilled. However, if workers or firms can evade taxes this irrelevance result might no longer apply. This will especially be the case if the fine for tax evasion depends...

Restrictions on work hours are more important in countries with a large welfare state. We show that this empirical observation is consistent with the strategic effects of such restrictions in a welfare state in the context of optimal direct taxation in the tradition of Mirrlees (1971). Our...

In Europe, the competence for social security and the right to levy income tax lie with the country of employment in cross-border matters. This has two disadvantages. First, the Employment Principle distorts active persons' choice of place of work. Second, the employment-based regulation of...

This paper deals with two policy approaches to address the problem of the ?pensions time bomb? by influencing private-sector pension provision. In assessing the role of private-sector pensions, it is common to concentrate exclusively on the issue of whether early retirement penalties or late...

We consider taxation by a utilitarian government in the presence of heterogeneous locations within a country. We show that a utilitarian government never equalizes after-tax incomes, even when it can impose group-specific lump-sum taxes. If migration is impossible, a utilitarian government may...

This paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment. It is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income. The optimal...

We show that taxation of rents may yield an intergenerational Pareto-improvement in a small open economy provided tax revenues are earmarked to reduce wage taxes. Previous literature has shown that rent taxation benefits current young and future generations, while we show that it also benefits...

Entrepreneurial activity is often regarded as an engine for economic growth and job creation. Through tax policy, governments possess a potential lever to influence the decisions of economic agents to start and close small businesses. In Germany, the top marginal income tax rates were reduced...

Decisions by firms and individuals on the extent of their tax payments have generally been treated as separate choices. Empirically, a positive relationship between corporate and personal income tax evasion can be observed. The theoretical analysis in this paper shows that a manager's decision...