Arbeitspapier
Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments
We investigate how the optimal nonlinear income tax schedule is modified when taxpayers can evade taxation by emigrating. We consider two symmetric countries with Maximin governments. Workers choose their labor supply along the intensive margin. The skill distribution is continuous, and, for each skill level, the distribution of migration cost is also continuous. We show that optimal marginal tax rates are nonnegative at the symmetric Nash equilibrium when the semi-elasticity of migration is decreasing in the skill level. When the semi-elasticity of migration is increasing in the skill level, either optimal marginal tax rates are positive everywhere or they are positive for the lower part of the skill distribution and then negative. Numerical simulations are calibrated using plausible values of the semi-elasticity of migration for top income earners. We show that the shape of optimal tax schedule varies significantly, depending on the profile of the semi-elasticity of migration over the entire skill distribution - a profile over which we lack empirical evidence.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 4351
- Classification
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Taxation and Subsidies: Efficiency; Optimal Taxation
International Fiscal Issues; International Public Goods
- Subject
-
optimal income tax
income tax competition
migration
labor mobility
Nash-equilibrium tax schedules
- Event
-
Geistige Schöpfung
- (who)
-
Lehmann, Etienne
Simula, Laurent
Trannoy, Alain
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2013
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Lehmann, Etienne
- Simula, Laurent
- Trannoy, Alain
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2013
Other Objects (12)
Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments
Do governments tax agglomeration rents?
Economic Growth and Tax-Competing Leviathans
Do local governments tax homeowner communities differently?
Do Local Governments Tax Homeowner Communities Differently?
Do local governments tax homeowner communities differently?
Tax Havens in a World of Competing Countries
Arbitrage and nonlinear tax scales
A Critique of Competing Plans for Radical Tax Restructuring
Hidden Havens: State and Local Governments as Tax Havens?
Multijurisdictional firms and governments' strategies under alternative tax designs
Stable and sustainable global tax coordination with Leviathan governments
Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments
Do governments tax agglomeration rents?
Economic Growth and Tax-Competing Leviathans
Do local governments tax homeowner communities differently?
Do Local Governments Tax Homeowner Communities Differently?
Do local governments tax homeowner communities differently?
Tax Havens in a World of Competing Countries
Arbitrage and nonlinear tax scales
A Critique of Competing Plans for Radical Tax Restructuring
Hidden Havens: State and Local Governments as Tax Havens?
Multijurisdictional firms and governments' strategies under alternative tax designs
Stable and sustainable global tax coordination with Leviathan governments
Tax Me If You Can! Optimal Nonlinear Income Tax between Competing Governments
Do governments tax agglomeration rents?
Economic Growth and Tax-Competing Leviathans
Do local governments tax homeowner communities differently?
Do Local Governments Tax Homeowner Communities Differently?
Do local governments tax homeowner communities differently?
Tax Havens in a World of Competing Countries
Arbitrage and nonlinear tax scales
A Critique of Competing Plans for Radical Tax Restructuring
Hidden Havens: State and Local Governments as Tax Havens?
Multijurisdictional firms and governments' strategies under alternative tax designs