Optimum income taxation and layoff taxes

Pierre Cahuc and Andre Zylberberg ()

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Abstract: This paper analyzes optimum income taxation in a model with endogenous job destruction that gives rise to unemployment. It is shown that optimal tax schemes comprise both payroll and layoff taxes when the state provides public unemployment insurance and aims at redistributing income. The optimal layoff tax is equal to the social cost of job destruction, which amounts to the sum of unemployment benefits (that the state pays to unemployed workers) and payroll taxes (that the state does not get when workers are unemployed).

Keywords: Job destruction; Layoff taxes; Optimal taxation; Job destruction. (search for similar items in EconPapers)
Date: 2008-10
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00255794v1
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Citations: View citations in EconPapers (19)

Published in Journal of Public Economics, 2008, 92 (10-11), pp.2003-2019. ⟨10.1016/j.jpubeco.2007.12.006⟩

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Journal Article: Optimum income taxation and layoff taxes (2008)
Working Paper: Optimum income taxation and layoff taxes (2008)
Working Paper: Optimum Income Taxation and Layoff Taxes (2005)
Working Paper: Optimum Income Taxation and Layoff Taxes (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00255794

DOI: 10.1016/j.jpubeco.2007.12.006

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