Estimating Implicit Marginal Tax Rates of Welfare Recipients across the US States

We study the design of child care subsidies in an optimal welfare problem with heterogeneous private market productivities. The optimal subsidy schedule is qualitatively similar to the existing US scheme. Efficiency mandates a subsidy on formal child care costs, with higher subsidies paid to lower income earners and a kink as a function of child care expenditure. Marginal labor income tax rates are set lower than the labor wedges, with the potential to generate negative marginal tax rates. We calibrate our simple model to features of the US labor market and focus on single mothers with children aged below 6. The optimal program provides stronger participation but milder intensive margin incentives for low-income earners with subsidy rates starting very high and decreasing with income more steeply than those in the United States. (JEL D82, H21, H24, J13, J16, J32)

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Measuring Revenue-maximizing Elasticities of Taxable Income

Public Finance Review ◽

10.1177/1091142115589970 ◽

2016 ◽

Vol 45 (2) ◽

pp. 174-204 ◽

Cited By ~ 2

Author(s):

John Creedy ◽

Norman Gemmell

Keyword(s):

Income Tax ◽

Tax Rates ◽

Marginal Rate ◽

Tax System ◽

Tax Rate ◽

Taxable Income ◽

Wide Range ◽

The Us ◽

Marginal Tax Rates ◽

The Right

This article considers the question of whether marginal tax rates (MTRs) in the US income tax system are on the “right” side of their respective Laffer curves. Previous attention has tended to focus specifically on the top MTR. Conceptual expressions for these “revenue-maximizing elasticities of taxable income” (ETI L), based on readily observable tax parameters, are presented for each tax rate in a multi-rate income tax system. Applying these to the US income tax, with its complex effective marginal rate structure, demonstrates that a wide range of revenue-maximizing ETI values can be expected within, and across, tax brackets and for all taxpayers in aggregate. For some significant groups of taxpayers, these revenue-maximizing ETIs appear to be within the range of empirically estimated elasticities.

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A Tale of Two Bases: Progressive Taxation of Capital and Labor Income

Public Finance Review ◽

10.1177/10911421211020016 ◽

2021 ◽

Vol 49 (3) ◽

pp. 335-391

Author(s):

Rachel Moore ◽

Brandon Pecoraro

Keyword(s):

Labor Income ◽

Tax Rates ◽

Capital Income ◽

Heterogeneous Agent ◽

Us Economy ◽

The Us ◽

Marginal Tax Rates ◽

Saving Decisions ◽

Jobs Act ◽

Modeling Feature

Macroeconomic models routinely abstract simultaneously from two features of the US federal tax code: the joint taxation of ordinary capital and labor income and the special taxation of preferential capital income. In this article, we argue that this abstraction omits a “portfolio-effect” mechanism where endogenous changes to the ordinary-preferential composition of households’ capital income influence individuals’ optimal labor and saving decisions through its impact on their effective marginal tax rates. We demonstrate the quantitative importance of this tax detail by simulating provisions from the recently enacted “Tax Cuts and Jobs Act” using a heterogeneous-agent overlapping generations framework calibrated to the US economy. Our findings imply that accounting for the detailed taxation of labor and capital income should be considered an important modeling feature for tax policy analysis.

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Problems of the US Economic Policy

Voprosy Ekonomiki ◽

10.32609/0042-8736-2013-5-129-143 ◽

2013 ◽

pp. 129-143

Author(s):

V. Klinov

Keyword(s):

Economic Policy ◽

Real Estate ◽

Full Employment ◽

Tax Rates ◽

Equitable Distribution ◽

Investment Rate ◽

The Us ◽

Budget Systems ◽

Enterprise Activity ◽

The U.S

How to provide for full employment and equitable distribution of incomes and wealth are the keenest issues of the U.S. society. The Democratic and the Republican Parties have elaborated opposing views on economic policy, though both parties are certain that the problems may be resolved through the reform of the federal tax and budget systems. Globalization demands to increase incentives for labor and enterprise activity and for savings to secure proper investment rate. Tax rates for labor and enterprise incomes are to be low, but tax rates for consumption, real estate and land should be progressive.

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