 Optimal Taxation of Top Labor Incomes: A Tale of Three ElasticitiesThomas Piketty, Emmanuel Saez and Stefanie Stantcheva Post-Print from HAL Abstract: This paper derives optimal top tax rate formulas in a model where top earners respond to taxes through three channels: labor supply, tax avoidance, and compensation bargaining. The optimal top tax rate increases when there are zero-sum compensation-bargaining effects. We present empirical evidence consistent with bargaining effects. Top tax rate cuts are associated with top one percent pretax income shares increases but not higher economic growth. US CEO "pay for luck" is quantitatively more prevalent when top tax rates are low. International CEO pay levels are negatively correlated with top tax rates, even controlling for firms' characteristics and performance. Keywords: Optimal Taxation; Top Labor Incomes (search for similar items in EconPapers) Published in American Economic Journal: Economic Policy, 2014, 6 (1), pp.230-271. ⟨10.1257/pol.6.1.230⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00944873 DOI: 10.1257/pol.6.1.230 Access Statistics for this paper More papers in Post-Print from HAL |
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