Bunching in rank-dependent optimal income tax schedules - Aix-Marseille Université
Article Dans Une Revue Social Choice and Welfare Année : 2023

Bunching in rank-dependent optimal income tax schedules

Résumé

Considering optimal non-linear income tax problems when the social welfare function only depends on ranks as in Yaari (Econometrica 55(1):95–115, 1987) and weights agreeing with the Lorenz quasi-ordering, we extend the analysis of Simula and Trannoy (Am Econ J Econ Policy, 2021) in two directions. First, we establish conditions under which bunching does not occur in the social optimum. We find a sufficient condition on individual preferences, which appears as a reinforcement of the Spence-Mirrlees condition. In particular, the marginal dis-utility of gross income should be convex, but less convex the higher the productivity. We also show that, for all productivity distributions with a log-concave survival function, bunching is precluded under the maximin, Gini, and “illfare-ranked single-series Ginis”. Second, we turn to a discrete population setting, and provide an “ABC” formula for optimal marginal tax rates, which is related to those for a continuum of types found in Simula and Trannoy (2021), but remain essentially distinct.
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Dates et versions

hal-03550894 , version 1 (02-02-2022)

Identifiants

Citer

Laurent Simula, Alain Trannoy. Bunching in rank-dependent optimal income tax schedules. Social Choice and Welfare, 2023, 60 (1), pp.237-263. ⟨10.1007/s00355-021-01384-1⟩. ⟨hal-03550894⟩
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