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Disagreements in Society over Linear vs. over Nonlinear Labour-Income Tax Schedules

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  • Asen Ivanov

    (Queen Mary University of London, School of Economics and Finance)

Abstract

I investigate numerically the following question: Given that individuals with different wages disagree over the optimal labour-income tax schedule, how would such disagreements be affected if society restricted itself to using linear tax schedules? I find that there would be (i) a decrease in disagreements within a large segment of the population at the top of the wage distribution,(ii) a sharp decrease in how much a very-high-wage individual disagrees with individuals whose wage is weakly above the median but sufficiently far below her wage, (iii) a sharp decrease in how much a zero-wage individual disagrees with a median-wage individual, and (iv) a decrease in how much a zero-wage individual disagrees with high-wage individuals.

Suggested Citation

  • Asen Ivanov, 2024. "Disagreements in Society over Linear vs. over Nonlinear Labour-Income Tax Schedules," Working Papers 984, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:984
    as

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    File URL: https://www.qmul.ac.uk/sef/media/econ/research/workingpapers/2024/wp984.pdf
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    References listed on IDEAS

    as
    1. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
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    More about this item

    Keywords

    labour-income tax; linear tax; redistribution; conflict;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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