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Volume 2, No. 1,
April 2003
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A Note on
Redistributive Taxation, Labor Supply, and National
Income
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Volker
Grossmann*
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Socioeconomic Institute, University of Zurich, Switzerland
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Abstract
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This
paper shows that redistributive taxation can raise per
capita income provided that labor supply is
sufficiently backward-bending at higher wage rates.
Moreover, we study general equilibrium effects
regarding work incentives for less able individuals.
Finally, we show that optimal taxation typically
requires per capita income to decrease with higher
taxation at the margin.
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Key words
: backward-bending labor supply; linear
income tax; national income
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JEL classification
: H31; H21
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