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Taxation and Income Distribution Print E-mail

The objective of the subproject "Taxation and Income Distribution" is to clarify the role of different taxes, especially of those on bequests, on capital income and on consumption, within a coherent model of the economy. This is of particular importance, as the question whether these taxes should be part of the tax system (besides an optimal labor income tax) is still controversial in the literature. Consequently, the subproject aims at resolving the problem of the optimal tax mix by carrying forward research in a Mirrlees-type model of optimum taxation. In particular, it will concentrate on the question what realistic elements neglected by the literature (or most part of it) so far are crucial to make different taxes a useful supplement to an optimal labor income tax.

Two topics constitute the research programmed of this project part for a period of three years: The first topic "The role of bequests for the optimal tax structure" stresses the fact that the more able – and hence high income individuals – are also those who leave more bequests to their heirs. We will analyze whether this makes estate taxation appropriate for equity reasons, in addition to a labor income tax. Further, we ask whether and under what conditions an estate tax is equivalent to a capital income tax and/or a consumption tax. The second topic will deal with the role of uncertainty for the optimal tax structure. On the one hand, particular emphasis is laid on the fact that wage uncertainty is mainly an essential feature of the early work career in order to find out whether this provides a specific rationale for capital income taxation for insurance reasons. On the other hand, we will investigate whether wage uncertainty makes a case for estate taxation on the grounds of equity, in view of the fact that it depends on their (good/bad) luck, i.e. on their realized wage income, how much individuals will bequeath.

 

Project Leader

  Brunner, Johann
 University of Linz
 Taxation and Income Distribution
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Project Members

   Eckerstorfer, Paul
  University of Linz
  Taxation and Income Distribution
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  Pech, Susanne
 University of Linz
 Taxation and Income Distribution
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