The sufficient statistic approach: Predicting the top of the Laffer curve

Alejandro Badel and Mark Huggett

Journal of Monetary Economics, 2017, vol. 87, issue C, 1-12

Abstract: A formula for the revenue maximizing top tax rate is derived as a function of three elasticities. The formula applies to static models and to steady states of dynamic models and is relevant for the top tax rate on any component of income. The formula is applied to several classic models. The application of the formula is also illustrated using a quantitative human capital model.

Keywords: Sufficient statistic; Laffer curve; Marginal tax rate; Elasticity (search for similar items in EconPapers)
JEL-codes: D91 E21 H2 J24 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Related works:
Working Paper: The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve (2015)
Working Paper: The Sufficient Statistic Approach: Predicting the Top of the Laffer Curve (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:87:y:2017:i:c:p:1-12

DOI: 10.1016/j.jmoneco.2017.02.001

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