In most countries, average income varies with age. In this paper we investigate if and how it is possible to enhance the redistributive mechanism by relating tax payments to age. Using an OLG model where some individuals are low skilled all their life while others are low skilled when young but high skilled when old, we first show how an age dependent optimal income tax can Pareto improve upon an age independent income tax. We then characterize the optimal age dependent income tax. A tax on interest income is part of the optimal tax structure.

Age-related optimal income taxation / S. Blomquist, L. Micheletto. - In: SCANDINAVIAN JOURNAL OF ECONOMICS. - ISSN 0347-0520. - 110:1(2008), pp. 45-71. [10.1111/j.1467-9442.2008.00524.x]

Age-related optimal income taxation

L. Micheletto
Ultimo
2008

Abstract

In most countries, average income varies with age. In this paper we investigate if and how it is possible to enhance the redistributive mechanism by relating tax payments to age. Using an OLG model where some individuals are low skilled all their life while others are low skilled when young but high skilled when old, we first show how an age dependent optimal income tax can Pareto improve upon an age independent income tax. We then characterize the optimal age dependent income tax. A tax on interest income is part of the optimal tax structure.
Age-specific taxes; Optimal taxation; Tagging
Settore SECS-P/03 - Scienza delle Finanze
2008
Article (author)
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2434/44641
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