Optimal Nonlinear Savings Taxation
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Authors
Brendon, C.
Publication Date
2022-03-25Series
Cambridge Working Papers in Economics
Janeway Institute Working Paper Series
Publisher
Faculty of Economics, University of Cambridge
Type
Working Paper
Metadata
Show full item recordCitation
Brendon, C. (2022). Optimal Nonlinear Savings Taxation. https://doi.org/10.17863/CAM.83968
Abstract
This paper analyses the design of optimal nonlinear savings taxation, in a multi-period consumption-savings economy where consumers face persistent, uninsurable shocks to the marginal value that they place on consuming. Its main contributions are: (a) to show that shocks of this kind generically justify positive marginal savings taxes, and (b) to characterise these taxes by reference to a limited number of sufficient statistics. The method for obtaining this characterisation is generalisable, and provides a roadmap for reconnecting ‘Mirrleesian’ and ‘sufficient statistics’ approaches to dynamic taxation. Intuitively, dynamic asymmetric information problems imply significant restrictions on intertemporal consumption elasticities. These restrictions keep sufficient statistics representations manageable, despite the multi-dimensional choice setting.
Keywords
Nonlinear Taxation, Sufficient Statistics, Mirrleesian Taxation, New Dynamic Public Finance
Identifiers
CWPE2221, JIWP2210
This record's DOI: https://doi.org/10.17863/CAM.83968
This record's URL: https://www.repository.cam.ac.uk/handle/1810/336547
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