Optimum Taxation of Each Year's Income

Thomas Gaube

Journal of Public Economic Theory, 2007, vol. 9, issue 1, pages 127-150

Abstract: In this paper, a two-type, two-period model of optimum income taxation is investigated. I assume full commitment and that current income determines the agents' tax burden in each period. It is shown that such a tax system does not allow one to implement the optimal long-term tax contract and that it implies positive marginal tax rates at the upper end of the income distribution. Copyright 2007 Blackwell Publishing, Inc..

Date: 2007
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