Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100435
Authors: 
Hansen, Emanuel
Year of Publication: 
2014
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: Taxation V E15-V2
Abstract: 
The paper studies optimal income taxation in a model with labor supply responses at the intensive and the extensive margin. It is shown that a utilitarian desire for redistribution does not pin down the sign of the optimal marginal tax rate: labor supply may be downward distorted, undistorted, or even upward distorted at both margins. The paper provides suffi cient conditions for the optimality of an EITC-style tax/transfer scheme under which labor supply is upward distorted at both margins for some skill groups. Furthermore, the paper shows optimal upward distortions at the intensive margin are driven by a non-standard tradeoff between effi ciency at the intensive margin and effi ciency at the extensive margin.
JEL: 
H21
H23
D82
Document Type: 
Conference Paper

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