 Redistributive taxation and migration under uncertaintyNo 1997086, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Abstract: Redistributive taxation under uncertainty has two functions: not only the redistribution of income across individuals who are ex ante different but also the sharing of risk between them. The economic integration of factor markets changes the distribution of income within each country, and so the redistributive policies must be changed to account for those changes. In this paper we show that, when mobile individuals are subject to a residence-based linear income tax, the optimal redistributive policy is dependent not only on the relative size of the economies but also on the timing of the migration process: under the small country hypothesis, there is no redistribution in equilibrium if workers’ migration decisions are taken with complete knowledge of incomes. If uncertainty is only solved after mobility has occurred, then it is possible to have redistributive taxation. In this latter case, the magnitude of the tax parameters depends on the size of the countries, i.e., on whether or not the home taxing authorities take foreign utilities as given. Keywords: Tax competition; Income redistribution; Uncertainty; Labour migration (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1997086 Access Statistics for this paper More papers in LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC. |
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