International Journal of Business and Economics Volume 2, No. 1 April​, 2003

A Note on Redistributive Taxation, Labor Supply, and National Income

Volker Grossmann

Socioeconomic Institute, University of Zurich, Switzerland

Abstract

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.

Keywords：backward-bending labor supply, linear income tax, national income.

JEL Classifications：H31, H21.

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