Open Access. Powered by Scholars. Published by Universities.®

Social and Behavioral Sciences Commons

Open Access. Powered by Scholars. Published by Universities.®

SelectedWorks

Georges Casamatta

Selected Works

2011

Optimal taxation

Articles 1 - 3 of 3

Full-Text Articles in Social and Behavioral Sciences

Optimal Bequests Taxation In The Steady State, Georges Casamatta Mar 2011

Optimal Bequests Taxation In The Steady State, Georges Casamatta

Georges Casamatta

We consider an infinite-horizon economy populated by two types of individuals, some individuals being more productive than others. Individuals live one period and are altruistic toward their children. We first determine the second-best steady state allocation and then study the optimal bequest and labor income tax functions. We consider independent income and bequests tax functions. We firrst show that the second-best is not implementable with such tax schedules. We then exhibit a condition under which high bequests should be taxed (and low bequests subsidized). A numerical example suggests that this condition is likely to be met when individuals are sufficiently …


Tax Avoidance And The Design Of The Tax Structure, Georges Casamatta Jan 2011

Tax Avoidance And The Design Of The Tax Structure, Georges Casamatta

Georges Casamatta

We study the optimal mix of direct and indirect taxes in the presence of tax avoidance. It is shown that a linear consumption tax is part of the optimal tax scheme, and so even when the assumptions of the Atkinson-Stiglitz theorem are not satisfied. The reason is that taxing consumption is a way to tax true income, whereas income taxation only falls on reported income. We also show that, with a weakly separable utility function and linear Engel curves, tax rates should be uniform across goods. With nonlinear Engel curves, which good should be taxed more depends on the comparison …


Optimal Income Taxation With Tax Avoidance, Georges Casamatta Jan 2011

Optimal Income Taxation With Tax Avoidance, Georges Casamatta

Georges Casamatta

We follow the approach of Grochulski (2007), who determines the optimal income tax schedule when individuals have the possibility of avoiding paying taxes. We however modify his setup by considering a convex concealment cost function. This assumption violates the subadditivity property used in Grochulski (2007) and this has strong implications for the design of the tax schedule. This latter indeed shows that, with subadditivity, all individuals should declare their true income. Tax avoidance is thus not optimal. With a convex cost function, we find that a subset of individuals, located in the interior of the income distribution, should be allowed …