Dynamic Tax Reforms

Nicolas Werquin, Aleh Tsyvinski and Mikhail Golosov
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Nicolas Werquin: Yale University

No 879, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: This paper derives novel formulas for the welfare gains of any tax reform around initial (optimal or suboptimal) dynamic tax systems. We use a perturbation-based method to express these formulas in terms of easily interpretable and empirically estimable parameters: elasticities of income and savings with respect to the tax rates, and the shape of the income and savings distributions. This generates new theoretical insights about dynamic optimal taxes, as well as policy implications regarding directions of tax reforms of the current US tax code.

Date: 2013
New Economics Papers: this item is included in nep-acc, nep-dge, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:879

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