Corpus ID: 17936581

The Redistributive Benefits of Progressive Labor Income Taxation : How Large Should Top Marginal Tax Rates Be ?

@inproceedings{Kindermann2014TheRB,
  title={The Redistributive Benefits of Progressive Labor Income Taxation : How Large Should Top Marginal Tax Rates Be ?},
  author={Fabian Kindermann and Dirk Krueger},
  year={2014}
}
In this paper we argue that very high marginal labor income tax rates are an effective tool for social insurance even when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. To make this point we construct a large scale Overlapping Generations Model with uninsurable labor productivity risk, show that it has a wealth distribution that matches the data well, and then use it to characterize fiscal policies… 
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