Tax me if you can! Optimal Nonlinear Income Tax Between Competing Governments

Etienne Lehmann (), Laurent Simula and Alain Trannoy

The Quarterly Journal of Economics, 2014, vol. 129, issue 4, 1995-2030

Abstract: We investigate how potential tax-driven migrations modify the Mirrlees income tax schedule when two countries play Nash. The social objective is the maximin and preferences are quasi-linear in consumption. Individuals differ both in skills and migration costs, which are continuously distributed. We derive the optimal marginal income tax rates at the equilibrium, extending the Diamond-Saez formula. We show that the level and the slope of the semi-elasticity of migration (on which we lack empirical evidence) are crucial to derive the shape of optimal marginal income tax. JEL Codes: D82, H21, H87, F22.

Date: 2014
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Working Paper: Tax Me if You Can! Optimal Nonlinear Income Tax between Competing Governments (2014)
Working Paper: Tax me if you can! Optimal Nonlinear Income Tax Between Competing Governments (2014)
Working Paper: Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments (2013)
Working Paper: Tax Me If You Can! Optimal Nonlinear Income Tax Between Competing Governments (2013)
Working Paper: Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments (2013)
Working Paper: Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments (2013)
Working Paper: Tax Me If You Can!Optimal Nonlinear Income Tax Between Competing Governments (2013)
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