Preference responsibility versus poverty reduction in the taxation of labor incomes

• 成果类型: Article
• 署名作者: de Frahan, Lancelot Henry; Maniquet, Francois
• 署名单位: University of Chicago; Universite Catholique Louvain
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2021.104386
• 发表日期: 2021
• 关键词: Optimal taxation; RESPONSIBILITY; poverty reduction

摘要

We study the tax schemes that maximize social welfare functions built on axioms of responsibility for one's preferences (the requirement that the social welfare function should treat identically agents with the same wage, independently of their preferences) and poverty reduction. We find zero and negative marginal tax rates on low incomes at the optimum and bunching at the income level of the most hardworking minimum wage households. When preferences are iso-elastic, we derive the optimal tax formula, which we calibrate to the US economy. Our formula approximates the shape of the current US tax function for households with at least one child. This result suggests that a fairness-based approach, and these axioms in particular, can help close the gap between the recommendations of optimal tax theory and actual policies. (c) 2021 Elsevier B.V. All rights reserved.