We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear …

We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … provide a novel decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear …

literature is that redistribution is best done centrally, and thus that an income tax is best used by the federal government … a tool of greater redistribution. At the same time, the insurance function of a progressive income tax can still be …In addition to funding government and redistributing income, a redistributive tax-and-transfer system, and a …