TY  - RPRT
CY  - Toulouse
ID  - publications44175
UR  - http://tse-fr.eu/pub/126368
A1  - Hellwig, Christian
A1  - Werquin, Nicolas
Y1  - 2022/01//
N2  - We study optimal tax design based on the idea that policy-makers face trade-offs between multiple margins of redistribution. Within a Mirrleesian economy with earnings, consumption and retirement savings, we derive a novel formula for optimal income and savings distortions based on redistributional arbitrage. We establish a sufficient statistics representation of the labor income and capital tax rates on top income earners in dynamic environments, which relies on the observed distributions of both income and consumption. Because consumption has a thinner Pareto tail than income, our quantitative results suggest that it is optimal to shift a substantial fraction of the top earners' tax burden from income to savings.
PB  - TSE Working Paper
T3  - TSE Working Paper
M1  - working_paper
TI  - A fair day's pay for a fair day's work: optimal tax design as redistributional arbitrage
AV  - public
EP  - 58
ER  -