Journal article | Zeitschriftenartikel
Flat Income Taxation, Redistribution and Labour Market Performance
A flat tax rate on labour income has gained popularity in European countries. This paper assesses the attractiveness of such a flat tax in achieving redistributive objectives with the smallest distortions to employment. We do so by using a detailed applied general equilibrium model for the Netherlands. The model is empirically grounded in the data and encompasses decisions on hours worked, labour force participation, skill formation, wage bargaining between unions and firms, and a wide variety of institutional details. The simulations suggest that the replacement of the current tax system in the Netherlands by a flat rate will harm labour market performance if aggregate income inequality is contained. Only flat tax reforms that reduce redistribution will raise employment. This finding bolsters the notions from optimal tax literature regarding the equity-efficiency trade off and the superiority of non-linear taxes to obtain redistributive goals in an efficient way.
- ISSN
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1466-4283
- Extent
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Seite(n): 3209-3220
- Language
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Englisch
- Notes
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Status: Postprint; begutachtet (peer reviewed)
- Bibliographic citation
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Applied Economics, 42(25)
- Subject
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Wirtschaft
Wirtschaftspolitik
Volkswirtschaftstheorie
- Event
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Geistige Schöpfung
- (who)
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Mooij, Ruud de
Jacobs, Bas
Folmer, Kees
- Event
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Veröffentlichung
- (when)
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2009
- DOI
- URN
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urn:nbn:de:0168-ssoar-242000
- Rights
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GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln
- Last update
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21.06.2024, 4:27 PM CEST
Data provider
GESIS - Leibniz-Institut für Sozialwissenschaften. Bibliothek Köln. If you have any questions about the object, please contact the data provider.
Object type
- Zeitschriftenartikel
Associated
- Mooij, Ruud de
- Jacobs, Bas
- Folmer, Kees
Time of origin
- 2009
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Factor taxation, income distribution, and capital market integration
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Borda-optimal taxation of labour income
Income Taxation and Dual Job Labour Supply
Labour market institutions and income inequality
Income Distribution and Redistribution
Skill heterogeneity and market labour income inequality
Environmental Taxation and Redistribution Concerns
Environmental taxation and redistribution concerns
Optimal random taxation and redistribution
Optimal capital income taxation, investment subsidies and redistribution in a neoclassical growth model
Optimal Capital Income Taxation, Investment Subsidies and Redistribution in a Neoclassical Growth Model