The top labour income tax bracket in Molvania applies to people with incomes of $500,000 and above. The elasticity of taxable income has been precisely estimated to be 1/6. The average income people in the top tax bracket is $1,000,000. Assuming society places no social welfare weight on people in the top tax bracket, what is the optimal top labour income tax rate in Molvania?
The top labour income tax bracket in Molvania applies to people with incomes of $500,000 and above. The elasticity of taxable income has been precisely estimated to be 1/6. The average income people in the top tax bracket is $1,000,000. Assuming society places no social welfare weight on people in the top tax bracket, what is the optimal top labour income tax rate in Molvania?
Chapter17: Income, Poverty, And Health Care
Section: Chapter Questions
Problem 11P
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The top labour income tax bracket in Molvania applies to people with incomes of $500,000 and above. The elasticity of taxable income has been precisely estimated to be 1/6. The average income people in the top tax bracket is $1,000,000. Assuming society places no social welfare weight on people in the top tax bracket, what is the optimal top labour income tax rate in Molvania?
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