Labor Migration and the Case for Flat Tax

Tomer Blumkin, Efraim Sadka and Yotam Shem-Tov

No 3471, CESifo Working Paper Series from CESifo

Abstract: In this paper we employ a tax-competition model to demonstrate that in the presence of migration the re-distributive advantage of a non-linear income tax system over a linear (flat) one is significantly mitigated relative to the autarky (no-migration) equilibrium. When migration threats are sufficiently strong, a coordinated shift from a non-linear (prima-facie superior) system to a flat (inferior) regime is not too welfare-costly, even when the extent of re-distribution is significant. Therefore, such a shift may be warranted on administrative grounds. We also show, as expected, that migration reduces the extent of redistribution.

Keywords: flat tax; re-distribution; migration; tax-competition (search for similar items in EconPapers)
JEL-codes: D60 H20 H50 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3471

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