Taxing the Rich

Augustin Landier (1) , Guillaume Plantin (2, 3)

1 TSE-R - Toulouse School of Economics
2 UT Capitole - Université Toulouse Capitole
3 Tepper School of Business

Affluent households can respond to taxation with means that are not economically viable for the rest of the population, such as sophisticated tax plans and international tax arbitrage. This paper studies an economy in which an inequality-averse social planner faces agents who have access to a tax-avoidance technology with increasing returns to scale, and who can shape the risk profile of their income as they see fit. Scale economies in avoidance imply that optimal taxation is regressive at the top. This in turn may trigger excessive risk taking.

Keywords: Taxation; Theoretical framework; Tax-avoidance

Domains: Humanities and Social Sciences; Economics and Finance

Augustin Landier, Guillaume Plantin. Taxing the Rich. 2013. ⟨hal-03470576⟩