Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät, Universität Hannover 255
Previous studies have shown that the optimal marginal tax rate at the bottom of the income distribution may be positive, negative, or even zero. This paper reexamines this problem in a unified framework and tries to evaluate the arguments. It turns out that the case for positive marginal tax rates is quite strong, whereas negative marginal tax rates seem to be based on a misconception.
Optimal income taxation contract theory incentives welfare