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Title:Labor migration and the case for flat tax PDF Logo
Authors:Blumkin, Tomer
Sadka, Efraim
Shem-Tov, Yotam
Issue Date:2011
Series/Report no.:CESifo working paper: Public Finance 3471
Abstract:In this paper we employ a tax-competition model to demonstrate that in the presence of migration the re-distributive advantage of a non-linear income tax system over a linear (flat) one is significantly mitigated relative to the autarky (no-migration) equilibrium. When migration threats are sufficiently strong, a coordinated shift from a non-linear (prima-facie superior) system to a flat (inferior) regime is not too welfare-costly, even when the extent of re-distribution is significant. Therefore, such a shift may be warranted on administrative grounds. We also show, as expected, that migration reduces the extent of redistribution.
Subjects:flat tax
re-distribution
migration
tax-competition
JEL:D60
H20
H50
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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