Titelaufnahme

Titel
Optimal income taxation with labor supply responses at two margins: when is an earned income tax credit optimal? / Emanuel Hansen
VerfasserDesmet, Pieter Marc Andries In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn : Max Planck Institute for Research on Collective Goods, May 2017
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Elektronische Ressource
Umfang1 Online-Ressource (79 Seiten) : Diagramme
SeriePreprints of the Max Planck Institute for Research on Collective Goods ; 2017,10
URNurn:nbn:de:hbz:5:2-139030 Persistent Identifier (URN)
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 Das Dokument ist frei verfügbar.
Volltexte
Optimal income taxation with labor supply responses at two margins: when is an earned income tax credit optimal? [0.93 mb]
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Zusammenfassung

This paper studies optimal non-linear income taxation in an empirically plausible model with labor supply responses at the intensive (hours, e ort) and the extensive (participation) margin. In this model, redistributive taxation gives rise to a previously neglected trade-o between two aspects of e ciency: To reduce the deadweight loss from distortions at the extensive margin, the social planner has to increase distortions at the intensive margin and vice versa. Due to this trade-o , minimizing the overall deadweight loss requires to distort labor supply by low-skill workers upwards at both margins. Building on these insights, the paper is the rst to provide conditions under which social welfare is maximized by an Earned Income Tax Credit with negative marginal taxes and negative participation taxes at low income levels.