Non-linear Capital Taxation Without Commitment

Emmanuel Farhi; C. Sleet; I. Werning; S. Yeltekin

doi:10.1093/restud/rds001

Review of Economic Studies Vol. 79 No. 4 2012

Non-linear Capital Taxation Without Commitment

Emmanuel Farhi^1,2; C. Sleet³; I. Werning⁴; S. Yeltekin

¹ Harvard University · ² Toulouse School of Economics · ³ Carnegie Mellon University · ⁴ Massachusetts Institute of Technology

open access

Abstract

We study efficient non-linear taxation of labour and capital in a dynamic Mirrleesian model incorporating political economy constraints. Policies are chosen sequentially over time, without commitment. Our main result is that the marginal tax on capital income is progressive, in the sense that richer agents face higher marginal tax rates.

DOI: 10.1093/restud/rds001
Volume: 79
Issue: 4
Pages: 1469-1493
Language: en
Sources: bibtex:phds-export.bib openalex crossref

Non-linear Capital Taxation Without Commitment

Abstract

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