The Resource On optimal personal income taxation, Paweł Doligalski

On optimal personal income taxation, Paweł Doligalski

Label
On optimal personal income taxation
Title
On optimal personal income taxation
Statement of responsibility
Paweł Doligalski
Creator
Contributor
Subject
Language
eng
Summary
How should we tax people's incomes? I address this question from three di erent angles. The rst chapter describes the optimal income tax when people can hide earnings by working in a shadow economy. The second chapter examines the optimal taxation of employees when rms can insure their workers and help them avoid taxes. The nal chapter shows that a basic income policy - an unconditional cash transfer to every citizen - can, under certain conditions, be justi ed on e ciency grounds. In `Optimal Redistribution with a Shadow Economy', written jointly with Luis Rojas, we examine the constrained e cient allocations in the Mirrlees (1971) model with an informal sector. There are two labor markets: formal and informal. The planner observes only income from the formal market. We show that the shadow economy can be welfare improving through two channels. It can be used as a shelter against tax distortions, raising the e ciency of labor supply, and as a screening device, bene ting redistribution. We calibrate the model to Colombia, where 58% of workers are employed informally. The optimal share of shadow workers is close to 22% for the Rawlsian planner and less than 1% for the Utilitarian planner. Furthermore, we nd that the optimal tax schedule is very di erent then the one implied by the Mirrlees (1971) model without the informal sector. New Dynamic Public Finance describes the optimal income tax in the economy without private insurance opportunities. In `Optimal Taxation with Permanent Employment Contracts' I extend this framework by introducing permanent employment contracts which facilitate insurance provision within rms. The optimal tax system becomes remarkably simple, as the government outsources most of the insurance provision to employers and focuses mainly on redistribution. When the government wants to redistribute to the poor, a dual labor market can be optimal. Less productive workers are hired on a xed-term basis and are partially insured by the government, while the more productive ones enjoy the full insurance provided by the permanent employment. Such arrangement can be preferred, as it minimizes the tax avoidance of top earners. I provide empirical evidence consistent with the theory and characterize the constrained e cient allocations for Italy. When does paying a strictly positive compensation in every state of the world improves incentives to exert e ort? In 'Minimal Compensation and Incentives for E ort' I show that in the typical model of moral hazard it happens only when the e ort is a strict complement to consumption. If the cost of e ort is monetary, a positive minimal compensation strengthens incentives only when the agent is prudent and always does so when the marginal utility of consumption is unbounded at zero consumption. I discuss potential applications of these results in personal income taxation. The minimal compensation can be interpreted as a basic income - an unconditional cash transfer to every citizen. Therefore, I provide an e ciency rationale for the basic income
Cataloging source
FIE
http://library.link/vocab/creatorName
Doligalski, Paweł
Date time place
Defence date: 24 June 2016
Dissertation note
Thesis (Ph. D.)--European University Institute (ECO), 2016.
Index
no index present
Literary form
non fiction
Nature of contents
theses
http://library.link/vocab/relatedWorkOrContributorName
European University Institute
Series statement
  • EUI PhD theses.
  • EUI theses
http://library.link/vocab/subjectName
  • Income tax
  • Taxation
  • Fiscal policy
Label
On optimal personal income taxation, Paweł Doligalski
Link
http://hdl.handle.net/1814/41984
Instantiates
Publication
Note
Examining Board: Professor Árpád Ábrahám, EUI, Supervisor; Professor Mikhail Golosov, Princeton University; Professor Dirk Krueger, University of Pennsylvania; Professor Ramon Marimon, EUI
Bibliography note
Includes bibliographical references (p. 131-136)
Control code
FIEb17855986
Dimensions
30 cm.
Extent
136 pages
Other physical details
illustrations
System control number
(OCoLC)1088473642
Label
On optimal personal income taxation, Paweł Doligalski
Link
http://hdl.handle.net/1814/41984
Publication
Note
Examining Board: Professor Árpád Ábrahám, EUI, Supervisor; Professor Mikhail Golosov, Princeton University; Professor Dirk Krueger, University of Pennsylvania; Professor Ramon Marimon, EUI
Bibliography note
Includes bibliographical references (p. 131-136)
Control code
FIEb17855986
Dimensions
30 cm.
Extent
136 pages
Other physical details
illustrations
System control number
(OCoLC)1088473642

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