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    Data and Code for: High Marginal Tax Rates on the Top 1%? Lessons from a...

    • openicpsr.org
    Updated Nov 16, 2020
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    Dirk Krueger; Fabian Kindermann (2020). Data and Code for: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk [Dataset]. http://doi.org/10.3886/E126741V1
    Explore at:
    Dataset updated
    Nov 16, 2020
    Dataset provided by
    American Economic Association
    Authors
    Dirk Krueger; Fabian Kindermann
    License

    https://opensource.org/licenses/GPL-3.0https://opensource.org/licenses/GPL-3.0

    Description

    This paper argues that high marginal labor income tax rates on top earners are an effective tool for social insurance even when households have high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. We construct a large scale overlapping generations model with uninsurable labor productivity risk, show that it has a realistic wealth distribution and numerically characterize the optimal top marginal rate. We find that marginal tax rates for top 1% earners of 79% are optimal as long as the model earnings and wealth distributions display a degree of concentration as observed in US data.

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Share
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TwitterTwitter
Email
Click to copy link
Link copied
Close
Cite
Dirk Krueger; Fabian Kindermann (2020). Data and Code for: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk [Dataset]. http://doi.org/10.3886/E126741V1

Data and Code for: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk

Explore at:
Dataset updated
Nov 16, 2020
Dataset provided by
American Economic Association
Authors
Dirk Krueger; Fabian Kindermann
License

https://opensource.org/licenses/GPL-3.0https://opensource.org/licenses/GPL-3.0

Description

This paper argues that high marginal labor income tax rates on top earners are an effective tool for social insurance even when households have high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. We construct a large scale overlapping generations model with uninsurable labor productivity risk, show that it has a realistic wealth distribution and numerically characterize the optimal top marginal rate. We find that marginal tax rates for top 1% earners of 79% are optimal as long as the model earnings and wealth distributions display a degree of concentration as observed in US data.

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