Pareto Efficient Income Taxation with Stochastic Abilities

Stephen Coate and Marco Battaglini

No 140, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: 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

Keywords: dynamic taxation (search for similar items in EconPapers)
JEL-codes: D82 D90 E62 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.princeton.edu/~mbattagl/taxation.pdf main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Journal Article: Pareto efficient income taxation with stochastic abilities (2008)
Working Paper: Pareto Efficient Income Taxation with Stochastic Abilities (2003)
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:red:sed004:140

Access Statistics for this paper

More papers in 2004 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().