Nonlinear Capital Taxation Without Commitment

Nonlinear Capital Taxation Without Commitment

We study efficient non-linear taxation of labour and capital in a dynamic Mirrleesian model incorporating political economy constraints. Policies are chosen sequentially over time, without commitment. Our main result is that the marginal tax on capital income is progressive, in the sense that richer...

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Bibliographic Details
Main Authors: Werning, Ivan (Contributor), Farhi, Emmanuel (Author), Sleet, Christopher (Author), Yeltekin, Sevin (Author)
Other Authors: Massachusetts Institute of Technology. Department of Economics (Contributor)
Format: Article
Language:English
Published: Oxford University Press, 2013-12-09T13:13:23Z.
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Summary:We study efficient non-linear taxation of labour and capital in a dynamic Mirrleesian model incorporating political economy constraints. Policies are chosen sequentially over time, without commitment. Our main result is that the marginal tax on capital income is progressive, in the sense that richer agents face higher marginal tax rates.

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