Larger transfers financed with more progressive taxes? On the optimal design of taxes and transfers
| Autor: | Ferriere, Axelle, Grubener, Philipp, Navarro, Gaston, Vardishvili, Oliko |
|---|---|
| Přispěvatelé: | Paris School of Economics (PSE), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Paris Jourdan Sciences Economiques (PJSE), Université Paris 1 Panthéon-Sorbonne (UP1)-École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE), Goethe-University, Goethe-Universität Frankfurt am Main, Federal Reserve Board, Yale University [New Haven] |
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
Fiscal Policy
JEL: E - Macroeconomics and Monetary Economics/E.E6 - Macroeconomic Policy Macroeconomic Aspects of Public Finance and General Outlook/E.E6.E62 - Fiscal Policy JEL: H - Public Economics/H.H2 - Taxation Subsidies and Revenue/H.H2.H21 - Efficiency • Optimal Taxation JEL: H - Public Economics/H.H2 - Taxation Subsidies and Revenue/H.H2.H23 - Externalities • Redistributive Effects • Environmental Taxes and Subsidies JEL: E - Macroeconomics and Monetary Economics/E.E2 - Consumption Saving Production Investment Labor Markets and Informal Economy/E.E2.E21 - Consumption • Saving • Wealth Redistribution Optimal Taxation Heterogeneous Agents JEL: H - Public Economics/H.H5 - National Government Expenditures and Related Policies/H.H5.H53 - Government Expenditures and Welfare Programs [SHS.ECO]Humanities and Social Sciences/Economics and Finance |
| Popis: | We study the optimal joint design of targeted transfers and progressive income taxes. We develop a simple analytical model and demonstrate an optimally negative relation between transfers and income-tax progressivity, due to both efficiency and redistribution concerns. That is, higher transfers should be financed with lower income-tax progressivity. We next quantify the optimal fiscal plan in a rich dynamic model calibrated to the U.S. economy. Transfers should be generous and financed with moderate income-tax progressivity. To redistribute while preserving efficiency, average tax-and-transfer rates should be more progressive than marginal rates. Transfers, even if lump-sum, precisely allow to disentangle average from marginal rates. Targeted transfers further implement non-monotonic marginal rates, but generate only modest additional gains relative to a lump-sum transfer. Quantitatively, the left tail of the income distribution determines the optimal size of the transfer, while the right tail drives the optimal income-tax progressivity. |
| Databáze: | OpenAIRE |
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