English, Article, Journal or magazine article edition: Pareto Efficient Income Taxation with Stochastic Abilities Stephen Coate; Marco Battaglini

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Bookmark: http://trove.nla.gov.au/version/57268
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Pareto Efficient Income Taxation with Stochastic Abilities
Author
  • Stephen Coate
  • Marco Battaglini
Physical Description
  • preprint
Notes
  • This paper studies Pareto efficient income taxation in an economy with infinitely-lived individuals whose income generating abilities evolve according to a two-state Markov process. The study yields two main results. First, when individuals are risk neutral, the fraction of individuals who face a positive marginal income tax rate is always positive but converges to zero. Moreover, the tax rate these individuals face also goes to zero. Second, Pareto efficient income tax systems can be time-consistent even when the degree of correlation in ability types is large.
  • RePEc:nbr:nberwo:10119
  • This paper studies Pareto e.cient income taxation in an economy with infinitely-lived individuals whose income generating abilities evolve according to a two-state Markov process. The study yields two main results. First, when individuals are risk neutral, the fraction of individuals who face a positive marginal income tax rate is always positive but converges to zero. Moreover, the tax rate these individuals face also goes to zero. Second, Pareto e.cient income tax systems can be time-consistent even when the degree of correlation in ability types is large
  • dynamic taxation,
  • RePEc:red:sed004:140
Language
  • English
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