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Outsourcing and Optimal Nonlinear Taxation: A Note

Thomas Aronsson and Erkki Koskela

No 2269, CESifo Working Paper Series from CESifo

Abstract: This paper addresses outsourcing in the two-type optimal income tax model. If the government is able to control outsourcing via a direct tax instrument, outsourcing will not affect the marginal income tax structure. In the absence of a direct tax instrument, and under the plausible assumption that higher outsourcing increases the wage differential, the government will implement a lower marginal income tax rate for the low-ability type and a higher marginal income tax rate for the high-ability type than it would otherwise have done.

Keywords: outsourcing; optimal nonlinear taxation (search for similar items in EconPapers)
JEL-codes: H21 H25 J31 J62 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Outsourcing and optimal nonlinear taxation: A note (2009) Downloads
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