The Lifetime Marginal Tax Rate

M Kevin McGee

Public Finance = Finances publiques, 1989, vol. 44, issue 1, 51-61

Abstract: Within a lifecycle model, the marginal tax rate is defined as the increase in lifetime tax liability due to a unit increase in income. Under a flat rate income tax, the marginal tax rate on labor income is a declining function of age, distorting the intertemporal labor-supply decision. If the consumption/leisure and intertemporal consumption decisions are nonseparable, their relationship will shift the level of this function over the lifecycle, thereby affecting the tax's distortion of the consumption/leisure choice.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:pfi:pubfin:v:44:y:1989:i:1:p:51-61

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