Abstract
Afluent households can respond to taxation with means that are not economically viable for the rest of the population, such as sophisticated tax plans and international tax arbitrage. This paper studies an economy in which an inequality-averse social planner faces agents who have access to a tax-avoidance technology with increasing returns to scale, and who can shape the risk proÖle of their income as they see fit. Scale economies in avoidance imply that optimal taxation is regressive at the top. This in turn may trigger excessive risk taking.
Reference
Augustin Landier, and Guillaume Plantin, “Taxing the Rich”, The Review of Economic Studies, vol. 84, n. 3, July 2017, pp. 1186–1209.
See also
Published in
The Review of Economic Studies, vol. 84, n. 3, July 2017, pp. 1186–1209