Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Optimal Income Taxation
Journal of Economic Literature
vol. 62,
no. 2, June 2024
(pp. 637–738)
Abstract
This article explores subjects in optimal income taxation characterized by recent research interest, practical importance in light of concerns about inequality, potential for misunderstanding, and prospects for advancement. Throughout the analysis, paths for further investigation are highlighted. Areas of focus include multidimensional abilities and endogenous wages; asymmetric information and the income of founders; production and consumption externalities from labor effort; market power and rents; behavioral phenomena relating to perceptions of the income tax schedule, myopic labor supply, and the interactions of savings, savings policies, and labor supply; optimal income transfers; the relationship between optimal income taxation and the use of other instruments; and issues relating to the social welfare function and utility functions, including non-welfarist objectives, welfare weights, heterogeneous preferences, and taxation of the family.Citation
Kaplow, Louis. 2024. "Optimal Income Taxation." Journal of Economic Literature, 62 (2): 637–738. DOI: 10.1257/jel.20221647Additional Materials
JEL Classification
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D82 Asymmetric and Private Information; Mechanism Design
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- H21 Taxation and Subsidies: Efficiency; Optimal Taxation
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H53 National Government Expenditures and Welfare Programs
- J22 Time Allocation and Labor Supply