Amsterdam, North-Holland, pp. Walliser, Jan Adverse selection in the annuities market and the impact of privatizing social security. Apps, Patricia F. Categories : Taxation and redistribution Theory of taxation. Both the Atkinson—Stiglitz theorem and the Ramsay model used to derive the Chamley—Judd zero capital income tax result assume perfect capital markets. The Economic Consequences of Taxing the Rich. Ordover JA, Phelps ES The concept of optimal taxation in the overlapping-generations model of capital and wealth. By increasing the relative price of future consumption and causing the substitution of financial for human savings, capital taxes act as an implicit subsidy for human capital investments at the cost of creating a distortion in financial serving. Wilson Ch A model of insurance markets with incomplete information. ENW EndNote.
The Mirrlees Review of the UK tax system, together with its companion volume of optimal taxation, labour supply, capital income taxation, family life cycle.
to the whole life pattern of income,4 and to initial wealth; and in scheduling payments one would wish to pay. MIRRLEES OPTIMUM INCOME TAXATION over the tax threatens Mrs. Thatcher's political life, if not her physical safety. And it may prove.
In early numerical simulations of the Mirrlees optimal income tax.
A number of arguments relating to concerns for efficiency and equity may be found in the literature supporting the taxation of capital income, including 1 Corlett-Hague motives, 2 increases in consumption inequality over the life cycle, 3 heterogeneous preferences, 4 correlation between returns on savings and ability, 5 incomplete or imperfect insurance markets, 6 borrowing or liquidity constraints, 7 human capital distortions, 8 economic rents, and 9 avoidance of arbitrage between capital income and labor income taxation.
If - unlike the assumption in the model - the returns on saving are not equal for everyone, but are positively correlated with ability instead, capital income contains new information about an individuals' ability and should be taxed for redistributive reasons.
Video: Mirrlees income taxation of life Topic 4: Optimal Taxation Part 1 - Economics 2450A: Public Economics
We formulate an optimum income taxation model that incorporates these facts and discuss the conditions under which a linear tax on annuity payoffs, which raises more revenues from long-living individuals than from short-living, can serve as an instrument for redistribution.
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Apps, Patricia F. Boadway R, Keen M Redistribution.
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The zero optimal capital tax relies on the assumption of preference homogeneity. Does Atlas Shrug? Further, we consider a nonlinear tax on annuity payoffs, and find that it can be employed to correct the distortion of the rate of return caused by asymmetric information. Christiansen VA Which commodity taxes should supplement the income tax?
Thatcher's political life, if not her physical James Mirrlees () launched the second wave of optimal tax models by.
Video: Mirrlees income taxation of life How to show Maturity amount received from Life insurance in ITR - Section 10(10D)- Sadak
optimal income tax formula from the Diamond-Mirrlees commodity tax formula. In the. characterize optimal taxes without such constraints in a life-cycle context.
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the life cycle because the degree of income uncertainty is naturally. the feature of the Mirrlees approach that labor income taxes can be an.
In practice, however, individuals are often borrowing-constrained, i.
For a government, distinguishing between capital and labor incomes can be difficult.
Pech S Tax incentives for private life annuities and the social security reform: effects on consumption and on adverse selection. The market for private life annuities is characterised by adverse selection; that is, contracts offer lower than fair payoffs to individuals with low life expectancy. We formulate an optimum income taxation model that incorporates these facts and discuss the conditions under which a linear tax on annuity payoffs, which raises more revenues from long-living individuals than from short-living, can serve as an instrument for redistribution.
Optimum taxation of life annuities SpringerLink
The result can also be interpreted in Corlett—Hague terms: As the horizon grows to infinity, both present and future consumption become equally complementary to leisure as their elasticities become constant; since, according to the Corlett—Hague rule the taxation of commodities should depend on their complementarity to leisure, present and future consumption should be taxed at equal tax rates.
Both the Atkinson—Stiglitz theorem and the Ramsay model used to derive the Chamley—Judd zero capital income tax result assume perfect capital markets.
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Pech S Tax incentives for private life annuities and the social security reform: effects on consumption and on adverse selection. Download preview PDF. Mimeo, University of Essex Google Scholar.
Tax rate Flat Progressive Regressive Proportional.