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Optimum Taxation of Each Year's Income
Author(s) -
GAUBE THOMAS
Publication year - 2007
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2007.00301.x
Subject(s) - economics , income tax , distribution (mathematics) , microeconomics , international taxation , term (time) , double taxation , econometrics , monetary economics , public economics , tax reform , mathematics , mathematical analysis , physics , quantum mechanics
In this paper, a two‐type, two‐period model of optimum income taxation is investigated. I assume full commitment and that current income determines the agents' tax burden in each period. It is shown that such a tax system does not allow one to implement the optimal long‐term tax contract and that it implies positive marginal tax rates at the upper end of the income distribution.