What is the impact of the threat of migration for tax purposes on the optimum redistributive policy of a country which aims at preventing emigration of highly skilled individuals? We use the theory of optimum income taxation agrave; la Mirrlees [1971] to answer this question. The world consists...

In this paper we show that in a two sector economy with heterogeneous agents and competitive markets, in a steady state the optimal capital income tax rate is in general different from zero. The optimal tax policy in this setting depends on the relative price difference. In a two sector economy...