Equilibrium Tax Rates under Ex-ante Heterogeneity and Income-dependent Voting
Chang Bo Hyun (),
Yongsung Chang () and
Kim Sun-Bin ()
Additional contact information
Chang Bo Hyun: Ministry of Economy and Finance of Korea, Seoul, Korea
Kim Sun-Bin: Yonsei University, Seoul, Korea
The B.E. Journal of Macroeconomics, 2022, vol. 22, issue 2, 547-573
The standard models with incomplete markets (e.g. Aiyagari) have difficulty justifying the current income tax rates as an optimal or political equilibrium outcome. Given the highly skewed income distribution, the majority of the population would be in favor of raising taxes to a much higher level. We show that incorporating (i) the ex-ante heterogeneity of earnings and (ii) income-dependent voting behavior helps us to reconcile the large gap between the model and data.
Keywords: ex-ante heterogeneity; optimal tax; voter turnout rates (search for similar items in EconPapers)
JEL-codes: E62 H21 H31 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
For access to full text, subscription to the journal or payment for the individual article is required.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:22:y:2022:i:2:p:547-573:n:12
Ordering information: This journal article can be ordered from
Access Statistics for this article
The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti
More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().