Taxing rich Augustin Landier and Guillaume Plantin
By: Landier, Augustin
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Contributor(s): Plantin, Guillaume.
Material type: 
ArticlePublisher: 2017Subject(s): RIQUEZA | RENTAS ALTAS | IMPUESTOS | EVASION FISCAL | IMPOSICION OPTIMA | ELUSION FISCAL
In:
The review of economic studies v. 84 (3), n. 300, July 2017, p. 1186-1209Summary: Affluent households can respond to taxation with means that are not economically viable for therest of the population, such as sophisticated taxplans and international tax arbitrage. This article studies an economy in whichan inequality-averse social planner faces agents who have access to a tax-avoidancetechnology with subadditive costs, and who can shape the risk profile of their income as they see fit.Subadditive avoidance costs imply that optimal taxation cannot be progressive at the top. This in turn may trigger excessive risk-taking. When the avoidance technology consists in costly migration between two countries that compete fiscally, we show that an endogenous increase in inequality due to risk-taking makes progressive taxation more fragile, which vindicates in turn risk-taking and can lead to equilibria with regressive tax rates at the top, and high migrations of wealth towards the smaller country.
| Item type | Current location | Home library | Call number | Status | Date due | Barcode |
|---|---|---|---|---|---|---|
| IEF | OP 558/2017/300-1 (Browse shelf) | Available | OP 558/2017/300-1 |
Disponible en línea a través de la Biblioteca del Instituto de Estudios Fiscales. Bibliografía. Resumen. Conclusión.
Affluent households can respond to taxation with means that are not economically viable for therest of the population, such as sophisticated taxplans and international tax arbitrage. This article studies an economy in whichan inequality-averse social planner faces agents who have access to a tax-avoidancetechnology with subadditive costs, and who can shape the risk profile of their income as they see fit.Subadditive avoidance costs imply that optimal taxation cannot be progressive at the top. This in turn may trigger excessive risk-taking. When the avoidance technology consists in costly migration between two countries that compete fiscally, we show that an endogenous increase in inequality due to risk-taking makes progressive taxation more fragile, which vindicates in turn risk-taking and can lead to equilibria with regressive tax rates at the top, and high migrations of wealth towards the smaller country.
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