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Project Citation: 

Krueger, Dirk, and Kindermann, Fabian. Data and Code for: High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk. Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-03-25.

Project Description

Summary:  View help for Summary 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.

Scope of Project

Subject Terms:  View help for Subject Terms Progressive Taxation; Top 1%; Social Insurance; Income Inequality
JEL Classification:  View help for JEL Classification
      E62 Fiscal Policy
      H21 Taxation and Subsidies: Efficiency; Optimal Taxation
      H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
Data Type(s):  View help for Data Type(s) program source code

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