Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46390
Authors: 
Bastani, Spencer
Blomquist, Sören
Micheletto, Luca
Year of Publication: 
2010
Series/Report no.: 
CESifo working paper: Public Finance 3225
Abstract: 
Using a calibrated overlapping generations model we quantify the welfare gains of an age dependent income tax. Agents face uncertainty regarding future abilities and can by saving transfer consumption across periods. The welfare gain of switching from an age-independent to an age-dependent nonlinear tax amounts in our benchmark model to around three percent of GDP. The gains are particularly high when there are restrictions on debt policy. The gains of using a nonlinear- as opposed to a linear tax are even larger. Surprisingly, it is of secondary importance to optimally choose the tax on interest income.
Subjects: 
labor income taxation
capital income taxation
age-dependent taxes
OLG model
JEL: 
H21
H23
H24
Document Type: 
Working Paper

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