Working Paper: NBER ID: w30199
Authors: Louis Kaplow
Abstract: This article explores subjects in optimal income taxation characterized by recent research interest, practical importance in light of concerns about inequality, potential for misunderstanding, and prospects for advancement. Throughout, the analysis highlights paths for further investigation. Areas of focus include multidimensional abilities and endogenous wages; asymmetric information and the income of founders; production and consumption externalities from labor effort; market power and rents; behavioral phenomena relating to perceptions of the income tax schedule, myopic labor supply, and the interactions of savings, savings policies, and labor supply; optimal income transfers; the relationship between optimal income taxation and the use of other instruments; and issues relating to the social welfare function and utility functions, including nonwelfarist objectives, welfare weights, heterogeneous preferences, and taxation of the family.
Keywords: optimal income taxation; inequality; redistribution; behavioral economics
JEL Codes: A13; D61; D62; D63; D82; D83; H20; H21; H23; H24; H41; H43; H53; H55; J22; L40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| marginal tax rate (H21) | labor effort (J22) |
| government revenue requirements (H27) | marginal tax rate (H21) |
| labor effort (J22) | overall income distribution (D31) |
| misperception of tax schedules (H26) | labor supply (J20) |
| labor supply (J20) | utility and welfare outcomes (D69) |
| capital stakes (G32) | labor effort (J22) |