Kindermann, Fabian and Krueger, Dirk (2022) High Marginal Tax Rates on the Top 1 Percent? Lessons from a Life-Cycle Model with Idiosyncratic Income Risk. AMERICAN ECONOMIC JOURNAL-MACROECONOMICS, 14 (2). pp. 319-366. ISSN 1945-7707, 1945-7715
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This paper argues that high marginal labor income tax rates on top earners are an effective tool for social insurance even when households have high labor supply elasticity, households make dynamic savings decisions, and policies have general equilibrium effects. We construct a large-scale overlapping generations model with uninsurable labor productivity risk, show that it has a realistic wealth distribution, and numerically characterize the optimal top marginal rate. We find that marginal tax rates for top 1 percent earners of 79 percent are optimal as long as the model earnings and wealth distributions display a degree of concentration as observed in US data.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | OPTIMAL PROGRESSIVITY; OPTIMAL TAXATION; CAPITAL INCOME; HETEROGENEITY; POLICY; ENTREPRENEURSHIP; INEQUALITY; INSURANCE; EARNINGS; US |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Economics of the Public SectorWirtschaftspolitik (Professor Dr. Fabian Kindermann) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 07 Feb 2024 07:55 |
| Last Modified: | 07 Feb 2024 07:55 |
| URI: | https://pred.uni-regensburg.de/id/eprint/56951 |
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