Optimum Taxation of Each Year's Income |
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Authors: | THOMAS GAUBE |
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Affiliation: | University of Vienna |
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Abstract: | 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. |
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