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http://hdl.handle.net/10419/37486
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| Title: | | Taxation of Annual Income as a Commitment Device  |
| Authors: | | Gaube, Thomas |
| Issue Date: | | 2010 |
| Series/Report no.: | | Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Dynamic Aspects in Optimal Taxation F17-V3 |
| Abstract: | | I study a two-period model of nonlinear, information constrained income taxation. It is shown that time-consistent taxation of annual income welfare-dominates time-consistent taxation of lifetime income if preferences are such that stationary allocations are efficient. If uncertainty is taken into account and if state-contingent fiscal policy is not feasible, time-consistent taxation of annual income can also welfare-dominate taxation of lifetime income under commitment. These findings may help in explaining why governments usually tax annual rather than lifetime earnings. |
| Subjects: | | nonlinear income taxation tax base time-consistency commitment |
| JEL: | | H21 H24 H31 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Jahrestagung des Vereins für Socialpolitik 2010 (Kiel): Ökonomie der Familie
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