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Title:Optimal participation taxes PDF Logo
Authors:Vidar, Christiansen
Issue Date:2012
Series/Report no.:CESifo Working Paper: Public Finance 3941
Abstract:Addressing extensive labour supply responses, the literature has established a case for larger transfers to the working poor than to even poorer non-working people. This paper casts new light on this result. I argue that the result hinges crucially on the labour supply responses of people in income brackets above that of the working poor. Then distinguishing between more and less poor working people, I show that if a single working type faces a negative tax, it is the poorer one. I extend the analysis by endogenising wages and show that key conditions will be of the same form as with exogenous wages.
Subjects:Taxation
Subsidies and Revenue
Efficiency
Optimal Taxation
JEL:H21
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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