Optimal progressivity with age-dependent taxation

• 成果类型: Article
• 署名作者: Heathcote, Jonathan; Storesletten, Kjetil; Violante, Giovanni L.
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Oslo; Princeton University; Centre for Economic Policy Research - UK; IZA Institute Labor Economics; National Bureau of Economic Research
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2019.104074
• 发表日期: 2020
• 关键词: tax progressivity; life cycle; Income distribution; Skill iInvestment; labor supply; Skill investment

摘要

This paper studies optimal taxation of earnings when the degree of tax progressivity is allowed to vary with age. The setting is an overlapping-generations model that incorporates irreversible skill investment, flexible labor supply, ex ante heterogeneity in the disutility of work and the cost of skill acquisition, partially insurable wage risk, and a life cycle productivity profile. An analytically tractable version of the model without intertemporal trade is used to characterize and quantify the salient trade-offs in tax design. The key results are that progressivity should be U-shaped in age and that the average marginal tax rate should be increasing and concave in age. These findings are confirmed in a version of the model with borrowing and saving that we solve numerically. (c) 2020 Elsevier B.V. All rights reserved.