Download or read book Marginal Tax Rates and Income Inequality in a Life cycle Model written by David Altig and published by . This book was released on 1996 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Marginal Tax Rates and Income Inequality in a Life Cycle Model written by David Altig and published by . This book was released on 2015 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we perform computational counterfactual experiments to examine the quantitative impact of marginal tax rates on the distribution of income. Our methodology builds on previous simulation models developed by Auerbach and Kotlikoff and Fullerton and Rogers, and uses an algorithm that allows us to examine marginal tax rate structures in their literal form. We find that distortions associated with particular marginal tax rate structures have sizable effects on income inequality in a reasonably quantified life-cycle setting: In our baseline experiments, the change in steady-state income inequality under 1989 U.S. income tax rates vis-à-vis 1984 rates is about half as large as the change actually seen in the data over those two years, when measured in terms of a monetary metric derived from Gini coefficients.

Download or read book Income Inequality and the Life Cycle written by John Creedy and published by Edward Elgar Publishing. This book was released on 1992 with total page 282 pages. Available in PDF, EPUB and Kindle. Book excerpt: An empirical analysis of earnings over the life cycle which addresses major policy issues in several central areas. It examines measurement of wealth and lifetime inequality, earnings mobility between generations and the demographic effects on aggregate consumption.

Download or read book Marginal Tax Rates and Income Inequality written by David Altig and published by . This book was released on 1995 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book High Marginal Tax Rates on the Top 1 written by Fabian Kindermann and published by . This book was released on 2014 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we argue that very high marginal labor income tax rates are an effective tool for social insurance even when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. To make this point we construct a large scale Overlapping Generations Model with uninsurable labor productivity risk, show that it has a wealth distribution that matches the data well, and then use it to characterize fiscal policies that achieve a desired degree of redistribution in society. We find that marginal tax rates on the top 1% of the earnings distribution of close to 90% are optimal. We document that this result is robust to plausible variation in the labor supply elasticity and holds regardless of whether social welfare is measured at the steady state only or includes transitional generations.

Download or read book Economic Inequality in the United States written by Lars Osberg and published by Routledge. This book was released on 2015-12-22 with total page 350 pages. Available in PDF, EPUB and Kindle. Book excerpt: Originally published in 1984, this study explores multiple theoretical perspectives as well as critically analysing the most recent evidence at the time to try and find a full explanation for inequality in the United States. Arguments of neoclassical economists and Marxist and institutional structuralists are considered by Osberg as well as putting forward his own model. Osberg uses his findings to attempt a complete explanation of the issue and advises on policies which could be undertaken by the government to try and lessen the gap. This title will be of interest to students of Economics.

Download or read book Redistribution with Unequal Life Expectancy written by Sebastian Köhne and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper introduces life expectancy inequality into a tractable Mirrleesian life-cycle model and characterizes the optimal income tax policy using theory and calibration. A positive association between life expectancy and income counteracts the well-known static pattern of declining marginal utility. As a result, the mechanical value of redistribution is reduced at all income levels. Moreover, the pension wedge becomes a novel determinant of optimal taxation, motivating relatively lower optimal tax rates for low earners and relatively higher optimal tax rates for high earners. Quantitatively, the effects of the mechanical value of redistribution dominate, and the optimal marginal tax rates fall by up to 10 percentage points when life expectancy is heterogeneous.

Download or read book Toward an Economic Theory of Income Distribution written by Alan S. Blinder and published by MIT Press (MA). This book was released on 1974 with total page 200 pages. Available in PDF, EPUB and Kindle. Book excerpt: Monograph on the economic theory of income distribution - covers size distribution models, progressive taxation, optimal consumption with variable interest rate, employment and leisure choices, wages dispersion, incomes policy relating to income redistribution through negative income taxes and wage subsidies, etc., and includes a simulation of distribution in the USA, and some directions for future research. Bibliography pp. 164 to 172, graphs and statistical tables.

Download or read book The Marginal Cost of Redistribution written by John Berghout Horowitz and published by . This book was released on 1988 with total page 318 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Causes and Consequences of Income Inequality written by Ms.Era Dabla-Norris and published by International Monetary Fund. This book was released on 2015-06-15 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the extent of income inequality from a global perspective, its drivers, and what to do about it. The drivers of inequality vary widely amongst countries, with some common drivers being the skill premium associated with technical change and globalization, weakening protection for labor, and lack of financial inclusion in developing countries. We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class. To tackle inequality, financial inclusion is imperative in emerging and developing countries while in advanced economies, policies should focus on raising human capital and skills and making tax systems more progressive.

Download or read book Essays in Quantitative Macroeconomics written by Philipp Grübener and published by . This book was released on 2021 with total page 191 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis contains four independent essays in heterogeneous agent macroeconomics. They explore the sources of income inequality and income risk and study the optimal design of public redistribution and insurance. The first chapter, joint with Filip Rozsypal, studies the origins of idiosyncratic earnings risk in frictional labor markets, with a particular focus on the role of firms for worker earnings risk. First, using administrative matched employer-employee data from Denmark, we document key properties of the worker earnings growth distribution, the firm revenue growth distribution, and their joint distribution. The worker earnings and firm revenue growth distributions exhibit strong deviations from normality, in particular excess kurtosis, with many workers and firms experiencing very small changes to their earnings/revenues, but a significant minority experiencing very large changes. Large earnings losses are more likely for workers in firms with negative revenue growth, driven both by separations to unemployment and earnings losses on the job. Second, we develop a model framework consistent with the data, with four key features: i) frictional labor markets and on the job search to capture unemployment risk and wage growth through a job ladder, ii) multi-worker firms to capture gross and net worker flows, iii) risk averse workers such that earnings risk matters, and iv) contracting with two-sided limited commitment because earnings of job stayers are changing infrequently in the data. Third, we use the model to explore policies designed to mitigate earnings fluctuations. The second chapter, joint with Annika Bacher and Lukas Nord, studies one particular private insurance margin against individual income risk only available to couples, which is the so called added worker effect. Specifically, we study how this intra-household insurance against individual job loss through increased spousal labor market participation varies over the life cycle. We show in U.S. data that the added worker effect is much stronger for young than for old households. A stochastic life cycle model of two-member households with job search in a frictional labor market is capable of replicating this finding. The model suggests that a lower added worker effect for the old is driven primarily by better insurance through asset holdings. Human capital differences between employed young and old contribute to the difference but are quantitatively less important, while differences in job arrival rates play a limited role. In the third chapter, joint with Axelle Ferriere, Gaston Navarro, and Oliko Vardishvili, we study optimal redistribution, taking into account not just the large income and wealth inequality in the data, but also the distribution of income risk that is key in the first two chapters. The U.S. fiscal system redistributes through a rich set of taxes and transfers, the latter accounting for a large part of the income of the poor. Motivated by this, we study the optimal joint design of transfers and income taxes. Within a simple heterogeneous-household framework, we derive analytical results on the optimal relationship between transfers and tax progressivity. Higher transfers are associated with lower optimal income tax progressivity. Redistribution is achieved with generous transfers while efficiency is preserved via a lower progressivity of income taxes. As such, the optimal tax-and-transfer system features larger progressivity of average than of marginal tax rates. We then quantify the optimal tax-and-transfer system in a rich incomplete-market model with realistic distributions of income, wealth, and income risk. The model features a novel flexible functional form for progressive income taxes and means-tested transfers. Relative to the current U.S. fiscal system, the optimal policy consists of more generous means-tested transfers, which phase-out at a slower rate. These larger transfers are financed with higher tax rates, but the taxes are not more progressive than the current system. The fourth chapter, joint with Axelle Ferriere and Dominik Sachs, also studies optimal redistribution, but instead of considering a stationary environment it analyzes the dynamics of the equity-efficiency trade-off along the growth path. To do so, we incorporate the optimal income taxation problem into a state-of-the-art multi-sector structural change general equilibrium model with non-homothetic preferences. We identify two key opposing forces. First, long-run productivity growth allows households to shift their consumption expenditures away from necessities. This implies a reduction in the dispersion of marginal utilities, and therefore calls for a welfare state that declines along the growth path. Yet, economic growth is also systematically associated with an increase in the skill premium, which raises inequality and the desire to redistribute. We quantitatively analyze these opposing forces for two countries: the U.S. from 1950 to 2010, and China from 1989 to 2009. Optimal redistribution decreases at early stages of development, as the role of non-homotheticities prevails. At later stages of development the rising income inequality dominates and the welfare state should become more generous.

Download or read book Does It Pay at the Margin to Work and Save Measuring Effective Marginal Taxes on Americans Labor Supply and Saving written by Laurence J. Kotlikoff and published by . This book was released on 2006 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Building on Gokhale, Kotlikoff, and Sluchynsky's (2002) study of Americans' incentives to work full or part time, this paper uses ESPlanner, a life-cycle financial planning program, in conjunction with detailed modeling of transfer programs to determine a) total marginal net tax rates on current labor supply, b) total net marginal tax rates on life-cycle labor supply, c) total net marginal tax rates on saving, and d) the tax-arbitrage opportunities available from contributing to retirement accounts. In seeking to provide the most comprehensive analysis to date of fiscal incentives, the paper incorporates federal and state personal income taxes, the FICA payroll tax, federal and state corporate income taxes, federal and state sales and excise taxes, Social Security benefits, Medicare benefits, Medicaid benefits, Foods Stamps, welfare (TAFCD) benefits, and other transfer program benefits. The paper offers four main takeaways. First, thanks to the incredible complexity of the U.S. fiscal system, it's impossible for anyone to understand her incentive to work, save, or contribute to retirement accounts absent highly advanced computer technology and software. Second, the U.S. fiscal system provides most households with very strong reasons to limit their labor supply and saving. Third, the system offers very high-income young and middle aged households as well as most older households tremendous opportunities to arbitrage the tax system by contributing to retirement accounts. Fourth, the patterns by age and income of marginal net tax rates on earnings, marginal net tax rates on saving, and tax-arbitrage opportunities can be summarized with one word -- bizarre.

Download or read book Determining the Relationship Between Marginal Income Tax Rates and Income Inequality from 1959 to 2005 written by Damian Kudelka and published by . This book was released on 2009 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: The regression results demonstrate a very strong negative association between marginal income tax rates and income inequality. This relationship is particularly dynamic for those in higher income tax brackets.

Download or read book Tax Progressivity and Income Inequality written by Joel Slemrod and published by Cambridge University Press. This book was released on 1996-10-13 with total page 388 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book assembles nine papers on tax progressivity and its relationship to income inequality, written by leading public finance economists. The papers document the changes during the 1980s in progressivity at the federal, state, and local level in the US. One chapter investigates the extent to which the declining progressivity contributed to the well-documented increase in income inequality over the past two decades, while others investigate the economic impact and cost of progressive tax systems. Special attention is given to the behavioral response to taxation of high-income individuals, portfolio behavior, and the taxation of capital gains. The concluding set of essays addresses the contentious issue of what constitutes a 'fair' tax system, contrasting public attitudes towards alternative tax systems to economists' notions of fairness. Each essay is followed by remarks of a commentator plus a summary of the discussion among contributors.

Download or read book Testing Piketty s Hypothesis on the Drivers of Income Inequality written by Carlos Góes and published by International Monetary Fund. This book was released on 2016-08-19 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: Thomas Piketty's Capital in the Twenty-First Century puts forth a logically consistent explanation for changes in income and wealth inequality patterns. However, while rich in data, the book provides no formal empirical testing for its theoretical causal chain. In this paper, I build a set of Panel SVAR models to check if inequality and capital share in the national income move up as the r-g gap grows. Using a sample of 19 advanced economies spanning over 30 years, I find no empirical evidence that dynamics move in the way Piketty suggests. Results are robust to several alternative estimates of r-g.

Download or read book Taxes and the Economy written by Thomas L. Hungerford and published by . This book was released on 2012-10-21 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: An analysis of the top marginal tax rates, tax cuts and economic growth.

Download or read book Rethinking Estate and Gift Taxation written by William G. Gale and published by Rowman & Littlefield. This book was released on 2011-07-01 with total page 544 pages. Available in PDF, EPUB and Kindle. Book excerpt: Although estate and gift taxes raise a small fraction of federal revenues, they have become sources of increasing political controversy. This book is designed to inform the current policy debate and build a conceptual basis for future scholarship. The book contains eleven original studies of estate and gift taxes, along with discussants' comments. The essays provide background and historical information; analyze the optimal taxation of estates and gifts; examine the effects of the tax on charitable contributions, saving behavior, the distribution and level of wealth, tax avoidance and tax evasion; and explore the effects of alternatives to estate taxation.