IDEAS home Printed from https://ideas.repec.org/a/bla/jpbect/v8y2006i4p697-711.html
   My bibliography  Save this article

Optimal Age‐Specific Income Taxation

Author

Listed:
  • JEAN‐MARIE LOZACHMEUR

Abstract

This paper studies optimal earnings taxation in a three‐period life‐cycle model where taxes can be differentiated according to age. Agents choose their level of education when young and their retirement age when old. I study the problem both without and with borrowing constraints. It is shown that, without borrowing constraints, a first‐best optimum can be decentralized by setting a zero tax rate in the third period and a first‐period tax lower than the second‐period one. With borrowing constraints, the first best can no longer be achieved. The gap between the first‐ and second‐period tax rates is larger, while the third‐period tax rate is generally different from zero.

Suggested Citation

  • Jean‐Marie Lozachmeur, 2006. "Optimal Age‐Specific Income Taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(4), pages 697-711, October.
    • Handle: RePEc:bla:jpbect:v:8:y:2006:i:4:p:697-711
    DOI: 10.1111/j.1467-9779.2006.00284.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9779.2006.00284.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9779.2006.00284.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pestieau, Pierre & Cremer, Helmuth & De Donder, Philippe & Maldonado, Darío, 2008. "Habit Formation and Labour Supply," CEPR Discussion Papers 6776, C.E.P.R. Discussion Papers.
    2. Pierre Pestieau & Maria Racionero, 2015. "Tagging with leisure needs," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(4), pages 687-706, December.
    3. Dedry, Antoine & Onder, Harun & Pestieau, Pierre, 2017. "Aging, social security design, and capital accumulation," The Journal of the Economics of Ageing, Elsevier, vol. 9(C), pages 145-155.
    4. repec:hal:spmain:info:hdl:2441/45smbs6p8180bqfu6epmve62q2 is not listed on IDEAS
    5. Diamond, Peter, 2010. "Taxes and Pensions," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 59-74.
    6. Spencer Bastani & Sören Blomquist & Luca Micheletto, 2013. "The Welfare Gains Of Age‐Related Optimal Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(4), pages 1219-1249, November.
    7. Gopi Shah Goda, 2007. "Implicit Social Security Tax Rates over the Life Cycle," Discussion Papers 06-021, Stanford Institute for Economic Policy Research.
    8. repec:bla:germec:v:9:y:2008:i::p:41-64 is not listed on IDEAS
    9. Kanbur, Ravi & Tuomala, Matti, 2016. "Groupings and the gains from tagging," Research in Economics, Elsevier, vol. 70(1), pages 53-63.
    10. Laitner, John & Silverman, Dan, 2012. "Consumption, retirement and social security: Evaluating the efficiency of reform that encourages longer careers," Journal of Public Economics, Elsevier, vol. 96(7-8), pages 615-634.
    11. Cremer, Helmuth & Pestieau, Pierre, 2016. "Taxing pensions," TSE Working Papers 16-629, Toulouse School of Economics (TSE).
    12. Hans FEHR, 2010. "Pension Reform with Variable Retirment Age," EcoMod2010 259600055, EcoMod.
    13. Woodland, A., 2016. "Taxation, Pensions, and Demographic Change," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 713-780, Elsevier.
    14. Nathalie Mathieu-Bolh, 2011. "Optimal taxation and borrowing constraints," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 36(31), pages 9-53, January-j.
    15. repec:hal:wpspec:info:hdl:2441/45smbs6p8180bqfu6epmve62q2 is not listed on IDEAS
    16. Cremer Helmuth & De Donder Philippe & Maldonado Dario & Pestieau Pierre, 2010. "Commodity Taxation under Habit Formation and Myopia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-27, September.
    17. Lans Bovenberg & Peter Birch Sørensen, 2009. "Optimal Social Insurance with Linear Income Taxation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 251-275, June.
    18. Jean-Marie Lozachmeur, 2006. "Disability insurance and optimal income taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 13(6), pages 717-732, November.
    19. repec:spo:wpecon:info:hdl:2441/45smbs6p8180bqfu6epmve62q2 is not listed on IDEAS
    20. repec:spo:wpmain:info:hdl:2441/45smbs6p8180bqfu6epmve62q2 is not listed on IDEAS

    More about this item

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jpbect:v:8:y:2006:i:4:p:697-711. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/apettea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.