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Tax Me if You Can! Optimal Nonlinear Income Tax between Competing Governments

Etienne Lehmann, Laurent Simula and Alain Trannoy

No 1415, AMSE Working Papers from Aix-Marseille School of Economics, France

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 quasilinear 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.

Keywords: optimal income tax; income tax competition; migration; labor mobility; Nash-equilibrium tax schedules (search for similar items in EconPapers)
JEL-codes: D82 H21 H87 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-05-14, Revised 2014-05-14
New Economics Papers: this item is included in nep-acc, nep-mig, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (119)

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