Tax curvature

• 成果类型: Article
• 署名作者: Hummel, Albert Jan
• 署名单位: University of Amsterdam; Tinbergen Institute
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2023.104921
• 发表日期: 2023
• 关键词: Monopsony; optimal taxation; Tax curvature

摘要

In a Mirrleesian environment, a monopsonist sets hourly wages and individuals choose how many hours to work. Labor market outcomes do not only depend on the level and slope of the income tax function, but also on its curvature. A more concave tax schedule raises the elasticity of labor supply, which boosts wages. Consequently, optimal marginal tax rates for low-skilled workers are declining in income. I derive an optimal tax formula in terms of sufficient statistics that accounts for the impact of tax curvature on labor market outcomes. Numerical simulations suggest that optimal marginal tax rates decline rapidly at low incomes.& COPY; 2023 The Author(s). Published by Elsevier B.V.This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).