03.06.2019
Tax Mechanisms and Gradient Flows
Hauptveranstaltung: Vortragsreihe "WIFO-Extern"
Personen:
Stefan Steinerberger
Sprache: Deutsch
Österreichisches Institut für Wirtschaftsforschung
We study the classic static optimal non-linear income taxation problem (Mirrlees, 1971). Diamond (1998) and Saez (2001) derive expressions for the optimal taxes that are widely used in public finance. Yet, even in the simplest cases, those do not provide closed-form solutions or a full characterisation for the optimal income tax. The solution is a coupled system of differential equations and has relatively few known characteristics. We derive a new characterisation of the optimum by showing that it satisfies what we call a "fairness principle": taxes at any given level are the average of nearby taxes. This is joint work with Aleh Tsyvinski (Yale).