Arbeitspapier

Optimal top marginal tax rates under income splitting for couples

This paper provides formulas for optimal top marginal tax rates when couples are taxed according to income splitting between spouses, consumption is taxed, and the skill distribution is unbounded. Optimal top marginal income tax rates are computed for Germany using a dataset that includes the tax returns of all German top taxpayers. We find that the optimal top marginal tax rate converges to about 2/3 and convergence obtains at income levels that are substantially higher than those currently subject to the actual top tax rate.

Language
Englisch

Bibliographic citation
Series: Diskussionsbeiträge ; No. 2011/21

Classification
Wirtschaft
Personal Income, Wealth, and Their Distributions
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Subject
optimal income taxation
top incomes
German income tax

Event
Geistige Schöpfung
(who)
Bach, Stefan
Corneo, Giacomo
Steiner, Viktor
Event
Veröffentlichung
(who)
Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft
(where)
Berlin
(when)
2011

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Bach, Stefan
  • Corneo, Giacomo
  • Steiner, Viktor
  • Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft

Time of origin

  • 2011

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