This paper solves an often neglected problem of efficient taxation where the policymaker is interested in minimizing the dead weight burden imposed on the society by labor income taxes. Specifically, it argues that the efficient tax function assumes the form of a step function. Furthermore, it...

We show using elementary arguments that the utilitarian approach to optimal taxation leads to results that are very sensitive to the underlying formulation of the problem. In particular, we argue that there are legitimate optimal taxation problems that admit solutions of a different form than...

The optimal labor income taxation problem is cast in the context of the Polish economy. We use the actual Polish data on labor income and the corresponding tax revenue provided by the Polish Tax Authority to calibrate the optimal taxation Problem of Mirrlees to the Polish data. We solve the...

We prove in the context of optimal taxation that the utility possibility frontier can be reached with step functions. This opens a possibility of existence of legitimate - with suitably chosen marginal social welfare weights - optimal taxation problems that admit solutions of a different form...

We focus exclusively on preferences characterized by the absence of income effects. We argue that the approach of Mirrlees to optimal taxation is faulty as it fails to identify the true optimum of the optimal taxation problem. Furthermore, we argue that zero optimal marginal tax rates are...

In this paper we present solutions to the optimal taxation problem in Poland in the case of high income earners. We characterize the actual data provided by the Polish Tax Authority and show that it is thick-tailed in the upper end of the distribution. Specifically, we show that income...