BASIC INCOME VERSUS WAGE SUBSIDIES: COMPETING INSTRUMENTS IN AN OPTIMAL TAX MODEL WITH A MAXIMIN OBJECTIVE

2004 ◽  
Vol 20 (1) ◽  
pp. 147-183 ◽  
Author(s):  
Robert van der Veen
Keyword(s):  
Real World ◽  
Wage Rate ◽  
Optimal Taxation ◽  
Income Policy ◽  
Basic Income ◽  
Labor Input ◽  
General Thesis ◽  
Optimal Tax ◽  
Individual Productivity ◽  
Normative Criteria

This article challenges the general thesis that an unconditional basic income, set at the highest sustainable level, is required for maximizing the income-leisure opportunities of the least advantaged, when income varies according to the responsible factor of labor input. In a linear optimal taxation model (of a type suggested by Vandenbroucke 2001) in which opportunities depend only on individual productivity, adding the instrument of a uniform wage subsidy generates an array of undominated policies besides the basic income maximizing policy, including a “zero basic income” policy which equalizes the post-tax wage rate. The choice among such undominated policies may be guided by distinct normative criteria which supplement the maximin objective in various ways. It is shown that most of these criteria will be compatible with, or actually select, the zero basic income policy and reject the basic income maximizing one. In view of the model's limited realism, the force of this main conclusion is discussed both in relation to Van Parijs' argument for basic income in Real Freedom for All (1995) and to some key empirical conditions in the real world.

A Note On The Principle Of Equal Opportunities

2007 ◽  
pp. 128
Author(s):  
Fernando Cabrales ◽  
Ana Fernández ◽  
Fritz Grafe
Keyword(s):  
Empirical Analysis ◽  
Optimal Taxation ◽  
Oecd Countries ◽  
Developing Economy ◽  
Equal Opportunities ◽  
Tax Rate ◽  
Income Differentials ◽  
Optimal Tax ◽  
Equality Of Opportunities ◽  
The Individual

This note presents an empirical analysis of optimal taxation in Chile, adopting Roemer’s equality of opportunities as the evaluation criterion. The equality of opportunities optimal tax rules seek to equalize income differentials arising from factors beyond the control of the individual. Roemer’s theory of equality of opportunities (Roemer, 1998) has been employed to compute the extent to which tax-andtransfer regimes in some OECD countries equalize opportunities among citizens for income acquisition. In this note we apply this approach to Chile, a developing economy, and compare the results to those reported in Roemer, Aaberge, Colombino, Fritzell, Jenkins, Marx, Page, Pommer, Ruiz-Castillo, Segundo, Tranaes, Wagner and Zubiri (2003). We find that the optimal tax rate in Chile according to Roemer’s equalopportunities approach should be zero.

Optimal Redistributional Instruments in Law and Economics

2017 ◽  
Author(s):  
Chris William Sanchirico
Keyword(s):  
Optimal Taxation ◽  
Law And Economics ◽  
Policy Instruments ◽  
Unintended Consequences ◽  
Policy Framework ◽  
Policy Uncertainty ◽  
Conventional Model ◽  
Policy Model ◽  
Optimal Tax ◽  
Adequate Information

This article discusses three strands of the literature on optimal redistributional instruments. The first strand concerns what is sometimes referred to as the ‘tax substitution argument’, which supports the proposition that distributional goals should generally be pursued exclusively through taxes (and subsidies) on labour earnings. The argument rests the controversial assumption that, controlling for labour earnings, all individuals are identical. The second strand, a response to the first, attempts to counter the view that labour earnings exclusivity for redistributional policy is the natural lesson of the economic literature on ‘optimal taxation’. This second subliterature examines the consequences of removing the tax substitution assumption while retaining, arguendo, the optimal tax and policy framework. The third strand of the literature, concerning ‘policy uncertainty’, steps outside the bounds of the conventional model of optimal tax and policy. It first arises as a kind of alternative defence of labour earnings exclusivity in light of the challenge posed by policy eclecticism. Even if the conventional optimal tax and policy model sans tax substitution assumption points toward eclecticism, the defence proceeds, policymakers lack adequate information about the proper direction and scale of distributionally motivated adjustments to other policy instruments. Given the risk of perverse unintended consequences, policymakers should refrain from distributionally motivated tinkering.

scholarly journals A Mathematical Model of Universal Basic Income and Its Numerical Simulations

Algorithms ◽  
2021 ◽  
Vol 14 (11) ◽  
pp. 331
Author(s):  
Maria Letizia Bertotti
Keyword(s):  
Mathematical Model ◽  
Mathematical Models ◽  
Numerical Simulations ◽  
Real World ◽  
Poverty Alleviation ◽  
The Other ◽  
Nonlinear Ordinary Differential Equations ◽  
Basic Income ◽  
Market Society ◽  
Number Of Individuals

In this paper, an elementary mathematical model describing the introduction of a universal basic income in a closed market society is constructed. The model is formulated in terms of a system of nonlinear ordinary differential equations, each of which gives account of how the number of individuals in a certain income class changes in time. Societies ruled by different fiscal systems (with no taxes, with taxation and redistribution, with a welfare system) are considered and the effect of the presence of a basic income in the various cases is analysed by means of numerical simulations. The main findings are that basic income effectively acts as a tool of poverty alleviation: indeed, in its presence the portion of individuals in the poorest classes and economic inequality diminish. Of course, the issue of a universal basic income in the real world is more complex and involves a variety of aspects. The goal here is simply to show how mathematical models can help in forecasting scenarios resulting from one or the other policy.

Taxation of Couples under Assortative Mating

2014 ◽  
Vol 6 (3) ◽  
pp. 155-177 ◽  
Author(s):  
Alexander Frankel
Keyword(s):  
Assortative Mating ◽  
Optimal Taxation ◽  
Married Couples ◽  
Tax Rates ◽  
Optimal Tax ◽  
Marginal Tax Rates ◽  
Multidimensional Screening

I present a simple and tractable model of the optimal taxation of married couples, working off of the multidimensional screening framework of Armstrong and Rochet (1999). In particular, I study how the tax code varies with the degree of assortative mating. One result is that the “negative jointness” of marginal tax rates found in Kleven, Kreiner, and Saez (2007, 2009) for couples with uncorrelated earnings should be attenuated in the presence of assortative mating. When mating is sufficiently assortative, the optimal tax schedule is separable: an individual's taxes do not depend on his or her spouse's income. (JEL D82, H21, H24, J12)

Basic Income Policy of Korea

2021 ◽  
pp. 1-18
Author(s):  
Dawon Kim ◽  
Jai S. Mah
Keyword(s):  
Income Policy ◽  
Basic Income

Feedback Nash equilibria in optimal taxation problems

2009 ◽  
Vol 7 (4) ◽  
Author(s):  
Mikhail Krastanov ◽  
Rossen Rozenov
Keyword(s):  
Continuous Time ◽  
Optimal Taxation ◽  
Public Economics ◽  
Nash Equilibria ◽  
Stackelberg Game ◽  
Necessary Optimality Conditions ◽  
Capital Income ◽  
Optimal Tax ◽  
Feedback Nash Equilibria ◽  
Long Run

AbstractA well-known result in public economics is that capital income should not be taxed in the long run. This result has been derived using necessary optimality conditions for an appropriate dynamic Stackelberg game. In this paper we consider three models of dynamic taxation in continuous time and suggest a method for calculating their feedback Nash equilibria based on a sufficient condition for optimality. We show that the optimal tax on capital income is generally different from zero.

scholarly journals Capital, Inequality and Justice: Reflections on Capital in the Twenty-First Century

2015 ◽  
Vol 10 (1) ◽  
Author(s):  
Thomas Piketty
Keyword(s):  
Optimal Taxation ◽  
Wealth Inequality ◽  
First Century ◽  
Basic Income ◽  
Multidimensional Approach ◽  
Property Relations ◽  
Twenty First Century ◽  
The Many

AbstractIn this article, I seek to sharpen the discussion about my book Capital in the twenty-first century, and to address some of the many issues raised by the very interesting papers that were put together by the editors of Basic Income Studies. I start by summarizing the multidimensional approach to capital and power that I develop in my book. I then clarify the role played by r>g in my analysis of wealth inequality. Finally, I discuss some of the implications of my analysis for optimal taxation; the relation between wealth, welfare and power; the basic income proposal; and the regulation of capital and property relations.

Sign in / Sign up

Export Citation Format

Share Document