Resumen de Optimal non linear labor income taxation in dynamic economies
Salvador Balle, Amedeo Spadaro Giardina
The aim of this paper is to explore the characteristics of the optimal non-linear labor income tax in dynamic economies with information asymmetries. In particular we analyze environments with exogenous and endogenous (to fiscal policy) human capital accumulation. The ultimate objective is to provide a sound basis for the efficiency versus equity debate. To achieve the objective, we develop a dynamic optimal income tax model in which agent�s productivity evolves in time according to two different factors: an exogenous component and a learning by doing process endogenous to the fiscal policy. The latter is determined by the government, maximizing in the initial period a social welfare function capturing some level of aversion to inequality. We characterize analytically the first order condition driving the optimal tax schedule in a model in which agents choose in the first period, for a given tax schedule, the consumption and labor supply patterns that maximize their lifetime utility function. We show that the inclusion of the endogenous evolution of productivities into the tax problem changes the results with respect to the static framework `a la Mirrlees (1971).
In particular we find that it can be optimal to subsidize (instead of taxing) high productivity agents.
