We study optimal taxation in a model with endogenous financial frictions, risky investment and occupational choice, where the distribution of wealth across entrepreneurs affects how efficiently capital is used. The planner chooses linear taxes on wealth, capital and labor income to maximize the...

An important proposition in the theory of efficient taxation is that, if capital income is taxed, all types of capital income should be taxed at the same rate. This conclusion has motivated extensive empirical analysis of the tax rates on different types of capital income. It has also been the...

This paper explores the characteristics of individual portfolio holdings in a world economy with a unified securities market where there are many countries, each with its own tax rates and inflation rate. When nominal interest is taxable but income to equity owners is tax exempt in all...

This paper reviews recent advances in the study of dynamic taxation, considering three main approaches: the dynamic Mirrlees, the parametric Ramsey, and the sufficient statistics approaches. In the first approach, agents' heterogeneous abilities to earn income are private information and evolve...

In economic analyses of the effects of tax policies, one commonly encounters discussions of the equivalence of apparently different policies, where equivalence is defined as the policies having the same impact on fundamental economic outcomes. These related tax policies may differ in many...

How much and how to tax high-income individuals is at the core of many recent proposals for incremental as well as fundamental tax reform. This paper critically reviews the economics literature and concludes that the right answer to these questions depends in part on value judgments about which...

This paper explores the implications of tax rate uncertainty, identifying circumstances in which revenue-neutral tax rate variability increases profitability, economic activity, and the efficiency of resource allocation. Furthermore, with heterogeneous taxpayers, tax rate variability is shown to...

This Handbook entry presents a conceptual, normative overview of the subject of taxation. It emphasizes the relationships among the main functions of taxation -- notably, raising revenue, redistributing income, and correcting externalities -- and the mapping between these functions and various...

This paper investigates whether taxpayers bunch at the kink points of the US income tax schedule (i.e. where marginal rates jump) using tax returns data. Clear evidence of bunching is found only at the first kink point (where marginal rates jump from 0 to 15%). Evidence for other kink points is...

We characterize optimal policies in a multidimensional nonlinear taxation model with bunching. We develop an empirically relevant model with cognitive and manual skills, firm heterogeneity, and labor market sorting. The analysis of optimal policy is based on two main results. We first derive an...