Nonlinear Capital Taxation without Commitment

Citation:

Farhi, Emmanuel, Chris Sleet, Ivan Werning, and Sevin Yeltekin. 2012. “Nonlinear Capital Taxation without Commitment.” Review of Economic Studies 79 (4): 1469-1493.
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Abstract:

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.

Last updated on 04/12/2013