In this paper, we study the optimal choices of the federal income tax, federal transfers, and local taxes in a dynamic model of capital accumulation and with explicit gamestructure s among multipleprivateage nts, multiplelocal governments, and the federal government. In general, the optimal...

In an economy with both inter- and intra-region inequality and inconsistency between the objectives of local and central governments, this paper studies optimal non-linear federal (central) income tax under non-linear regional income taxes. Starting with a benchmark model without labor mobility,...