Sufficient Statistics for Nonlinear Tax Systems with General Across-Income Heterogeneity

Antoine Ferey, Benjamin Lockwood and Dmitry Taubinsky

American Economic Review, 2024, vol. 114, issue 10, 3206-49

Abstract: This paper provides empirically implementable sufficient statistics formulas for optimal nonlinear tax systems in the presence of across-income heterogeneity in preferences, inheritances, income-shifting capabilities, and other sources. We characterize optimal smooth tax systems on income and savings (or other commodities), as well as simpler tax systems. We use familiar elasticity concepts and a novel sufficient statistic for heterogeneity correlated with earnings ability: the difference between across-income variation in savings and the causal effect of income on savings. We apply these formulas to the United States and find that the optimal savings tax is mostly positive and progressive.

JEL-codes: E21 G51 H21 H24 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.aeaweb.org/doi/10.1257/aer.20221053 (application/pdf)
https://doi.org/10.3886/E201364V1 (text/html)
https://www.aeaweb.org/doi/10.1257/aer.20221053.appx (application/pdf)
https://www.aeaweb.org/doi/10.1257/aer.20221053.ds (application/zip)
Access to full text is restricted to AEA members and institutional subscribers.

Related works:
Working Paper: Sufficient Statistics for Nonlinear Tax Systems with General Across-Income Heterogeneity (2022)
Working Paper: Sufficient Statistics for Nonlinear Tax Systems with General Across-income Heterogeneity (2022)
Working Paper: Sufficient Statistics for Nonlinear Tax Systems with General Across-Income Heterogeneity (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:aecrev:v:114:y:2024:i:10:p:3206-49

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

DOI: 10.1257/aer.20221053

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().