Optimal Linear and Two-bracket Income Taxes with Idiosyncratic Earning Risk
2012/12/25
研討會日期 : 2012-12-25
時間 : 21:00
主講人 : Professor Minchung Hsu
地點 : Conference Room B110
演講者簡介 : Mingchung Hsu received his Ph.D. in Economics from University of California, Los Angeles in 2007. He is currently serving as Assistant Professor of Economics at National Graduate Institute for Policy Studies. His research field is in macroeconomics, health insurance, social insurance, demographic changes and growth, public policy and economic dynamics.
演講摘要 : This paper quantitatively characterizes optimal linear and two-bracket income taxes. We consider a dynamic-stochastic-general-equilibrium model in which (i) agents face idiosyncratic earning risk that matches real-world data, (ii) tax distortion exerts its impact on both labor-leisure and consumption-saving decisions, and (iii) tax design involves redistributing income for both equity and social insurance. Substantive findings include: (a) similar to Slemrod et al. (1994), the welfare gain is minor if using a two-bracket tax rather than being confined to a linear tax; (b) a significant fraction of agents supply zero labor or hold zero assets at the optimum; (c) neglecting tax distortion imposed on either of labor-leisure and consumption saving decisions will lead to the prescription of tax codes that deviate substantially from the optimum; and (d) the optimal two-bracket tax schedule will turn from regressivity to progressivity in the marginal tax rate once the volatility of idiosyncratic shocks becomes sufficiently large. The last finding reconciles the contradictory results regarding the optimal two-bracket tax schedule between Slemrod et al.
