Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/37486
Authors: 
Gaube, Thomas
Year of Publication: 
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

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