Berliant, Marcus and Fujishima, Shota (2012): Optimal dynamic nonlinear income taxes: facing an uncertain future with a sluggish government.
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We consider the optimal nonlinear income taxation problem in a dynamic, stochastic environment when the government is sluggish in the sense that it cannot change the tax rule as uncertainty resolves. We argue that the zero top marginal tax rate result in static models is of little practical importance because it actually holds only when the top earner in the initial period receives the highest shock in every period.
|Item Type:||MPRA Paper|
|Original Title:||Optimal dynamic nonlinear income taxes: facing an uncertain future with a sluggish government|
|Keywords:||Optimal income taxation; New dynamic public finance|
|Subjects:||H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation|
|Depositing User:||Marcus Berliant|
|Date Deposited:||16. Oct 2012 10:49|
|Last Modified:||13. Feb 2013 20:17|
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